Rodney G. Englund, Dyann K. Englund, and Georgetown Contractors, LLC v. Dauphin Island Property Owners Association

• Court: Supreme Court of Alabama
• Decided: August 29, 2025
• Docket: SC-2024-0414
• Status: Published

Opinion

Rel: August 29, 2025

Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0650), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter.

SUPREME COURT OF ALABAMA SPECIAL TERM, 2025 _________________________

SC-2024-0414 _________________________

Rodney G. Englund, Dyann K. Englund, and Georgetown Contractors, LLC

v.

Dauphin Island Property Owners Association _________________________

SC-2024-0437 _________________________

Dauphin Island Property Owners Association

v. SC-2024-0414; SC-2024-0437

Rodney G. Englund, Dyann K. Englund, and Georgetown Contractors, LLC

Appeals from Mobile Circuit Court (CV-22-901826)

BRYAN, Justice.

In case no. SC-2024-0414, Rodney G. Englund, Dyann K. Englund,

and Georgetown Contractors, LLC ("Georgetown"), appeal from a

judgment of the Mobile Circuit Court ("the trial court") granting

permanent injunctive relief to the Dauphin Island Property Owners

Association ("the DIPOA"). The injunction required the Englunds and

Georgetown to stop construction of the Englunds' house on Dauphin

Island and to remove those portions of the house that the trial court found

had been built in violation of certain restrictive covenants. Alternatively,

the Englunds also appeal from the denial of their counterclaim asking

the trial court to require the DIPOA to enforce restrictive covenants

against their neighbor. In case no. SC-2024-0437, the DIPOA has cross-

appealed from the trial court's denial of its request for an award of

attorney fees.

For the reasons explained below, in case no. SC-2024-0414, we

reverse the trial court's judgment and render a judgment in favor of the

2 SC-2024-0414; SC-2024-0437

Englunds and Georgetown. As a result of that disposition, we dismiss as

moot the DIPOA's cross-appeal in case no. SC-2024-0437.

Background

The Englunds own Lot 23 in the Silver Cay II subdivision on

Dauphin Island. The lot borders Island Shores Drive and extends north

to the Mississippi Sound. The Englunds own and operate Georgetown, a

contracting company. They obtained a building permit from the Town of

Dauphin Island ("the Town") in August 2022. Georgetown then began

construction of a house on Lot 23.

In early October 2022, the DIPOA issued a stop-work order to the

Englunds and Georgetown. It said that the construction on Lot 23

violated certain restrictive covenants that required approval by the

DIPOA before any work began. Although the Englunds and Georgetown

had obtained a permit from the Town, they had not obtained a separate

permit from the DIPOA.

I. Procedural History

The DIPOA filed its complaint for declaratory and injunctive relief

on October 17, 2022. The complaint alleged that the Englunds and

Georgetown ("the defendants") had violated the pertinent restrictive

3 SC-2024-0414; SC-2024-0437

covenants by failing to get approval from the DIPOA for construction on

Lot 23 and that they had continued work on the house despite the stop-

work order. It also alleged that the Englunds' house violated a restrictive

covenant applicable to Lot 23 that prohibited buildings from extending

more than 90 feet from the road. The Englunds' house, the complaint

alleged, violated that restriction by approximately 23 feet.

The DIPOA sought a judgment declaring that the defendants had

violated the covenants. It sought a permanent injunction requiring the

DIPOA's approval before any further construction on the Englunds'

house and removal of any part of the house that extended beyond the 90-

foot setback. The DIPOA also sought an award of attorney fees that it

said were provided for in the restrictive covenants.

The trial court granted a temporary restraining order requiring the

defendants to cease work on the house pending resolution of the

proceedings. The defendants answered the complaint. They asserted

various affirmative defenses, including that the 90-foot setback

requirement was inequitable, that a permanent injunction would cause

severe hardship to the Englunds, and that the character of the

neighborhood had changed such that the setback requirement no longer

4 SC-2024-0414; SC-2024-0437

served a valid purpose or provided any benefit to the neighborhood and

should not be enforced.

In May 2023, the defendants amended their answer, and the

Englunds asserted a counterclaim against the DIPOA. The counterclaim

alleged that structures on Lot 24, which is adjacent to the Englunds'

property, violated both the 90-foot setback requirement and covenants

restricting the location of piers. The counterclaim asked that, if the

covenants were found enforceable as to the DIPOA's claims against the

defendants, the DIPOA be made to require the owners of Lot 24,

Randolph Coale and Natalie Coale, to remove their pier and portions of

their deck and pool that also allegedly violated the covenants. The

pleading did not name the Coales as parties or state any third-party

claim against them.

The DIPOA moved to dismiss the counterclaim, but that motion

was not ruled on before trial. The claims were ultimately tried in a bench

trial on December 11, 2023, and December 12, 2023. The trial court

received documentary evidence and heard testimony from several

witnesses. On February 14, 2024, the trial court issued its judgment.

In relevant part, it stated the following:

5 SC-2024-0414; SC-2024-0437

"The Court finds the Englunds have violated restrictive covenants by failing to obtain a building permit from the [DIPOA] and by violating the applicable Silver Cay II setback requirement. The [DIPOA] is entitled to enforce the covenants through permanent injunctive relief.

"The Court further Orders the Englunds to remove all portions of the building under construction that violates the 90[-]foot setback line forthwith.

"Any and all further or additional work to alter and/or complete the project on Lot 23 Silver Cay II Subdivision shall comply with all applicable covenants, only after acquiring the appropriate building permit(s) from the [DIPOA].

"The Counterclaim filed by the Englunds is DENIED.

"All costs, fees, and attorney fees are the responsibility of the respective parties."

(Capitalization in original.) Although the trial court's judgment noted

that the defendants had asserted affirmative defenses, it did not

otherwise expressly address them.

The defendants moved to alter, amend, or vacate, the judgment on

February 16, 2024. See Rule 59(e), Ala. R. Civ. P. They argued that the

trial court had failed to consider their equitable arguments that

enforcement of the 90-foot setback requirement against them would

cause undue hardship and that the covenant was unenforceable because

of a change in the neighborhood. They also argued that the trial court

6 SC-2024-0414; SC-2024-0437

had failed to properly consider the Englunds' counterclaim. The trial

court did not rule on the postjudgment motion, and it was denied by

operation of law on May 16, 2024. See Rule 59.1, Ala. R. Civ. P.

While the postjudgment motion was pending, the DIPOA moved

twice for an award of costs and attorney fees. The trial court denied its

requests. The defendants appealed (case no. SC-2024-0414). The DIPOA

cross-appealed (case no. SC-2024-0437).

II. Factual Background

The evidence presented by the parties during trial shows the

following relevant facts. Due to the unique history of Dauphin Island, to

build on most properties, property owners must obtain permits both from

the Town and from the DIPOA. The Town permitting process requires

plans to comply with the Town's building ordinances. Separately, the

DIPOA permitting process requires plans to comply with any restrictive

covenants that may apply to a particular property. The DIPOA has

authority to enforce restrictive covenants applicable to most properties

on Dauphin Island. Certain covenants apply generally to the whole

island, while others apply only to specific neighborhoods or particular

7 SC-2024-0414; SC-2024-0437

lots. Restrictive covenants may be put in place by private developers, but

often enforcement authority is granted to the DIPOA.

Most work of the DIPOA is done by volunteers. The DIPOA has

an architectural committee, which reviews permit applications

submitted to the DIPOA. The committee makes recommendations to the

DIPOA board, which then votes to approve or deny the applications. In

addition to permitting, the DIPOA owns and manages a golf course, a

clubhouse, a pool, several parks, and approximately five miles of

beachfront. The DIPOA does not regularly monitor new construction for

violations of restrictive covenants. Its board or architectural-committee

members typically investigate potential violations only after receiving

complaints from neighboring property owners.

The Town and the DIPOA operate out of separate offices and have

separate permit-application forms. The Town's application includes a

section with multiple check boxes, which the Town uses to notify

applicants if they need additional permits or coordination with other

authorities. This section of the application includes a check box for the

DIPOA. The Town's permit office makes DIPOA application forms

available for applicants. It also displays a sign stating that applicants

8 SC-2024-0414; SC-2024-0437

may need to contact the DIPOA for additional permits. The sign is

printed on standard paper and is displayed alongside other notices.

The DIPOA's application instructs applicants not to begin work

until the DIPOA has issued its approval. It states:

"DO NOT COMMENCE WORK UNTIL WRITTEN APPROVAL IS RECEIVED FROM DIPOA. A BUILDING PERMIT ISSUED BY THE TOWN OF DAUPHIN ISLAND DOES NOT SUPPLY, SATISFY OR WAIVE FOREGOING REQUIREMENT.

"FURTHER, NO EMPLOYEE OF THE TOWN IS AUTHORIZED TO GRANT APPROVAL OR WAIVE ANY REQUIREMENTS OF DIPOA.

"THE PERMITTING PROCESS IS NOT COMPLETE UNTIL THE APPLICATION IS APPROVED BY THE DIPOA OR THE PERMIT FEE IS PAID. DO NOT BEGIN WORK UNTIL YOU RECEIVE WRITTEN NOTICE OF APPROVAL."

(Emphasis and capitalization in original.)

The Town and the DIPOA have made efforts to simplify the

permitting processes for Dauphin Island property owners. By a 1990

agreement, the Town was to review permit applications for compliance

with restrictive covenants in exchange for a fee paid by the DIPOA. That

agreement was modified in 1997. Under the 1997 agreement, the Town

was to require applicants to provide additional plot plans and building

9 SC-2024-0414; SC-2024-0437

plans for the DIPOA. The Town was also to ask applicants to complete

the DIPOA application form. The DIPOA was to collect plans and

application forms from the Town each week. The DIPOA architectural

committee, rather than the Town, was to review the plans for compliance

with restrictive covenants and notify applicants of the results of its

review within 14 days.

The 1997 agreement was titled "One Building Permit Application

System Agreement" and is referred to by the parties as the "one-stop

agreement." That agreement includes a provision stating that it "may be

terminated by either party with 30 days['] written notice." It is

undisputed that neither the Town nor the DIPOA ever provided such

notice of termination.

It is also undisputed that the Town and the DIPOA did not always

cooperate successfully according to the terms of the agreement. The head

of the Town's permit department, Terry Sheffield, testified that the one-

stop agreement had never been fully explained to him. He understood

that there was just "a gentlemen's agreement" between the Town and the

DIPOA, whereby the Town would make information available to the

DIPOA, but that it was not required to do so. Sheffield faulted the

10 SC-2024-0414; SC-2024-0437

DIPOA for any failures of cooperation. He stated his belief that, at times,

infighting among members of the DIPOA board would result in delays.

At times, the DIPOA would pick up applications weekly as required by

the one-stop agreement. At times, it would not. At times, the DIPOA

would take longer than 14 days to reach a decision, at cost to property

owners.

DIPOA witnesses, however, faulted the Town for any failures of the

one-stop agreement. They said that the forms received by the DIPOA

were often illegible, such that the DIPOA could not identify the applicant

or the property at issue. They also said that, at times, the Town would

not provide all necessary documents or information.

A DIPOA board member said that, approximately five years before

trial, the Town notified the DIPOA that it would continue to collect plans

and documents for the DIPOA but that it would no longer withhold

issuance of its own permit pending approval by the DIPOA. Thus, as long

as applicants complied with the Town's ordinances, the Town would issue

its permit regardless of whether the DIPOA had approved the application

or whether its review was complete.

11 SC-2024-0414; SC-2024-0437

The DIPOA argues that the one-stop agreement was thus

terminated by the Town. However, the 1997 agreement did not require

the Town to withhold its permits pending DIPOA approval. No written

notice terminating the agreement was ever made by either party, as

required by the agreement. And, when the Englunds applied for their

permit and at the time of trial, the Town still collected information from

applicants and provided it to the DIPOA according to the terms of the

agreement. Approximately six months before trial, the Town began

providing the DIPOA information by email. One DIPOA board member

testified that cooperation between the Town and the DIPOA works much

better under that procedure.

The Englunds, operating through Georgetown, had built other

houses on Dauphin Island. For those houses, Rodney Englund had

completed the DIPOA's application forms and received DIPOA permits.

The evidence did not show whether Rodney submitted those forms via

the Town's permit office under the one-stop agreement or directly to the

DIPOA. For the house on Lot 23, however, he did not complete the

DIPOA's application form or receive a permit from the DIPOA.

12 SC-2024-0414; SC-2024-0437

Rodney testified that an employee at the Town permit office told

him that he did not have to go directly to the DIPOA but that, rather, the

Town would deliver his plans for him. He testified:

"I gave her my check. She gave me the permit. And while I was there, I asked her, I said: I haven't been to the [DIPOA], is it absolutely necessary I go? She said, no. We contact the [DIPOA] for you and they'll be in touch with you, so you don't have to go there. So I didn't."

Sheffield testified that it was the Town's policy at the time to collect

two sets of plans from applicants, one for the Town and one for the

DIPOA. He stated that it was the Town's policy at the time for permit

clerks to notify the DIPOA that permit applications had been made.

According to Sheffield, most contractors who work on Dauphin Island

know to go directly to the DIPOA for a separate permit and that it is not

merely the Town's responsibility to notify the DIPOA. It was possible, he

said, that a permit clerk had told Rodney that the Town would send a

copy of the Englunds' permit application to the DIPOA. But he said that

the permit clerks typically notified applicants, by checking the DIPOA

box on the Town's form, that they needed to go to the DIPOA for approval.

13 SC-2024-0414; SC-2024-0437

The DIPOA check box on the form given to Rodney was not

marked. 1 Sheffield did not know why the check box was unmarked and

assumed that it was an oversight. He testified that July and August that

year were "chaotic" times for the Town's permit office. It experienced

staff changes and transitioned to a new computer system. Sheffield did

not know if the Town sent a copy of the Englunds' application to the

DIPOA. DIPOA witnesses testified that they never received the

application.

The Englunds' deed to Lot 23 states that the "conveyance is made

subject to restrictive covenants, easements, rights-of-way and building

setback lines, if any, applicable to said real property, of record, in the

Office of the Judge of Probate Court of Mobile County, Alabama." It is

undisputed that the Englunds did not try to find out what restrictive

covenants applied to their property before they began construction.

1A later copy of the form from the Town's files does have the DIPOA

check box, and other boxes, filled in. Sheffield testified that a FEMA inspection had found discrepancies with 25 files for which paperwork was not completed properly. The Town's employees, Sheffield said, went back and changed those records to mark them properly to bring them into compliance with FEMA regulations. He assumed that is what had happened with Rodney's form. However, it seems undisputed that, on the original form, the DIPOA check box was not filled in. 14 SC-2024-0414; SC-2024-0437

Restrictive covenants generally applicable to much of the property

on Dauphin Island were recorded in the 1950s and are referred to

generally as the "green sheets." The DIPOA presented a document that

its board member and former president, Dennis Knizley, identified as the

green sheets. It is titled "CONDITIONS, RESERVATIONS,

RESTRICTIONS, LIMITATIONS, EXCEPTIONS, AND EASEMENTS

applicable to the 1953 Subdivision of Dauphin Island Alabama."

Paragraph 1(a) of the document provides that no building shall be

constructed without approval and permitting by the architectural

committee of the DIPOA. In case of violations, paragraph 12 of the

document gives the DIPOA authority to enforce its restrictive covenants

by "appropriate proceedings in a court of competent jurisdiction" and

provides that the DIPOA "shall be able to recover damages, other

compensation, and/or attorney's fees and costs for such violations."

Paragraph 12 also states: "The failure to enforce any of the restrictions

herein set forth at the time of their violation shall in no event be deemed

to be a waiver of the right to do so thereafter."

Knizley testified that the document was the original green sheets

by which the DIPOA operated. However, the document includes the

15 SC-2024-0414; SC-2024-0437

heading "As Amended," bears no date, no signatures, and no marks

showing that it had been recorded. Counsel for the parties discussed on

the record questions raised by the "As Amended" heading. Counsel for

the DIPOA noted that "there have been several retypes of the green

sheet" but that he had submitted the "original" to the trial court. Counsel

for the defendants expressed doubt that the document was the original

but never objected to its admission or to the DIPOA witnesses' reliance

on it. 2

Lot 23 is part of a subdivision known as Silver Cay II. Restrictive

covenants applicable to the subdivision were recorded in 1984 and were

submitted to the trial court. They adopt by reference paragraph 1 and

paragraph 12 of the " 'Building Restrictions and Protective Covenants

applicable to the 1953 Subdivision of Dauphin Island, Ala[bama],' dated

the 15th day of June, 1954[,] and recorded in Deed Book 601 N.S. Page

402 in the office of the Judge of Probate of Mobile County, Alabama."

The Silver Cay II restrictive covenants provide:

2The defendants did argue in their posttrial and postjudgment briefs that the document was not authenticated. On appeal, the DIPOA has moved to strike that argument.

16 SC-2024-0414; SC-2024-0437

"No building shall be located on any lot nearer than 30 feet to any street …. No building shall be located on any lot numbered 19 through 27 inclusive, further than 70 feet to the back of the building from the front lot line. … For the purpose of this covenant, eaves and steps shall not be considered as part of the building …."

The 70-foot setback was extended to 90 feet for lots 19 through 25 by an

amendment recorded in 1993 and confirmed by another amendment

recorded in 1996.

It appears from the Silver Cay II plot plan that lots 19 to 27 are a

row of lots in the subdivision that border the Mississippi Sound. The rest

of the neighborhood comprises interior lots with no water access or lots

with water access that sit significantly to the north due to a curve in the

shoreline.

The original purpose of the setback requirement applicable to Lot

23 is unclear. Witnesses who testified for the DIPOA had no memory of

the original purpose but believed that it was to preserve sunset views for

neighboring houses. Thus, the DIPOA argues, the restriction is still

necessary. The defendants posit that the purpose of the restriction was

to keep houses a safe distance from the water. They submitted evidence

indicating that the shoreline has changed due to the accretion of sand

after major storms and that the water line is now significantly further 17 SC-2024-0414; SC-2024-0437

from the street than it was when the restrictions were originally

recorded. Thus, they argue, the setback requirement now serves no

legitimate purpose.

The Town issued its building permit to Georgetown for Lot 23 on

August 18, 2022. Rodney testified that, before he had house plans

created, he met with Sheffield and another inspector at Lot 23 to help

him determine how big a house he could build. According to Rodney, with

their help, he staked out corners for the house. For the side facing the

street, he lined up the front of the house with other houses and measured

the appropriate setback according to the town's regulations. For the side

facing the shore, Rodney said that he was told that he could build

anywhere he wanted, so long as it was a certain distance from the high-

tide mark.

Sheffield remembered meeting with Rodney. He remembered

measuring the setback from the street and generally walking off the

shore side of the house. He did not remember telling Rodney that he

could build as far back as he wanted. Sheffield testified that he generally

tells landowners to make sure that they line up with other houses on each

18 SC-2024-0414; SC-2024-0437

side. Neither Rodney nor Sheffield remembered discussing anything

about the 90-foot setback.

The defendants thereafter created plans for the house, ordered

materials, and began construction. When asked why he did not follow up

to make sure that he had the DIPOA's approval before beginning

construction, Rodney testified that he was busy and forgot. He stated

that, at the time, his wife Dyann had been sick with COVID and that he

was working on three other houses.

Work on the Englunds' house proceeded. When asked at trial

whether he had seen the construction when it began, Knizley testified:

"I'm sure I did. I didn't pay particular attention to it[,] but I'm sure I saw

the construction." DIPOA board member and current president Eric Bay

testified that he had taken a photograph of the construction when rafters

had been erected but the roof and walls had not yet been put in place.

When asked about his failure to further investigate the construction, he

stated: "[Y]es, I could have gone way out of my way to do something [the

defendants] could've done. … Why is the onus on us when [Rodney] knew

who we were and didn't apply to us[?]"

19 SC-2024-0414; SC-2024-0437

Once the pilings were driven, the house was framed, and the roof

was on, the Englunds' house extended closer to the shore than the

neighboring houses. It violates the 90-foot setback requirement by

approximately 23 feet. The defendants note that neighboring decks and

pools extend as far back as the Englunds' house. However, it is parts of

the main body of the Englunds' house, not a deck or a pool, that sit beyond

the 90-foot setback.

As construction began, a neighbor told the Englunds that the house

was too far back and violated the 90-foot setback requirement. Rodney

stated that he did not know anything about a setback requirement and

assumed that his construction was fine because that neighbor's deck and

pool were the same distance from the street. The DIPOA received

complaints from the Englunds' neighbors about the house and

investigated. It issued its stop-work order on October 5, 2022.

A cover letter written by the DIPOA attorney mentions the

Englunds' failure to obtain a DIPOA permit and an apparent violation of

the neighborhood setback requirement. The stop-work order itself

mentions only the Englunds' failure to obtain the DIPOA's approval. It

also mentions the DIPOA's intent to file suit and seek costs and attorney

20 SC-2024-0414; SC-2024-0437

fees if the Englunds did not comply with that requirement. The DIPOA

attorney did include recorded copies of the Silver Cay II restrictive

covenants and an unrecorded copy of the green sheets.

Rodney testified that, the same day he received the stop-work order,

windows and doors were delivered to the house. The delivery was early

and unexpected. Rodney stated that he could not return the materials.

So, to prevent the loss of $20,000 to $25,000 worth of materials, he had

them installed despite the stop-work order. The DIPOA filed its

complaint shortly thereafter, on October 17.

Upon receiving the stop-work order, Rodney was upset and went

directly to the DIPOA office. He made his displeasure clear to the DIPOA

members there. Later, more calmly, he asked what he could do to remedy

the violations. He was told that he could apply for a variance if his

immediate neighbors agreed.

While litigation was pending, the Englunds did obtain consents

from their immediate neighbors and applied to the DIPOA for a variance.

Both consents were the result of negotiations. For a neighbor on one side,

Phillip Hayes, the Englunds agreed to build him an extended porch to

preserve his property's sunset views. For the neighbors on the other side,

21 SC-2024-0414; SC-2024-0437

the Coales, the Englunds agreed not to file suit directly to have them

remove their pier, which allegedly encroached on the Englunds' water

line and interfered with the placement of their own pier.

Under the Englunds' reading of the 90-foot setback requirement,

per the plain language of the restriction, any structure besides eaves and

steps could not extend beyond 90 feet from the street. Thus, under that

reading, the Coales' deck and pool were in violation of the setback

requirement. Also, although the Coales had obtained the DIPOA's

approval for the placement of their pier, the Englunds alleged that it too

was in violation of a restrictive covenant and actually encroached into the

Englunds' water line. The Englunds argued that the encroachment

interfered with their ability to build their own pier in compliance with

the restrictive covenants.

At the time the Englunds and the Coales entered into their

agreement about the variance, the Englunds had already filed their

counterclaim seeking an injunction requiring the DIPOA to enforce the

covenants against the Coales. In exchange for the Coales' consent to the

variance, the Englunds agreed not to sue the Coales directly but would

continue to pursue their counterclaim against the DIPOA.

22 SC-2024-0414; SC-2024-0437

The consents from both neighbors were limited to the Englunds'

obtaining the variance from the DIPOA. The consents also were given

solely for the pending application and would not extend to any future

requests for a variance by the Englunds.

The DIPOA architectural committee recommended approval of the

variance, but the DIPOA board denied it unanimously. Bay testified that

the board denied the variance for three primary reasons. First, the

DIPOA board did not want to set a bad precedent for future applications,

such that landowners would build wherever they wanted and destroy the

views of neighboring property owners. Second, several board members

felt that Rodney had deliberately failed to obtain a DIPOA permit so that

he could build his house wherever he wanted. Third, some board

members felt that the consents from the Englunds' neighbors had been

"coerced." One neighbor, Bay said, was "bribed" with a deck and the other

had been "threatened" with suit such that the Englunds were "twisting

arms" to get what they wanted.

Knizley's testimony was in line with the second reason given for the

board's denial of the variance. He testified that he believed that what

was "really going on" in the dispute was that Rodney knew that he had

23 SC-2024-0414; SC-2024-0437

to get a DIPOA permit and deliberately flouted the DIPOA's authority in

violating the 90-foot setback requirement. As to evidence of coercion,

Hayes testified that he was fine with the Englunds' house where it was

so long as he still had a view of the sunset, and thus he had agreed to the

extension of his deck. The Coales did not testify about their negotiations

with the Englunds.

While suit was pending, Rodney also submitted an application to

the DIPOA for a permit to build on Lot 23. That application was denied

because of the setback violation.

Neighboring landowners near Lot 23 testified about the loss of

sunset views resulting from the Englunds' violation of the 90-foot setback

requirement. Hayes believed that the loss would affect his property's

value, but, he said, until he attempts to sell, he could not say by how

much. Three other neighbors near Lot 23 testified that the Englunds'

house would cause them to lose sunset views for part of the year. Two

believed that the violation would affect their property values, but neither

testified by how much or stated that they had attempted to sell and had

seen negative impacts as a result of the violation. One neighbor also

believed that the setback requirement had value because it protected the

24 SC-2024-0414; SC-2024-0437

ecosystem. However, his primary complaint was that the Englunds

should have to obey the covenants just like everyone else. One neighbor

believed that allowing the setback violation would set a bad precedent

and that future new construction would be built so as to further block

views.

The DIPOA proposed an alternate floor plan for the Englunds'

house on Lot 23 that would not violate the setback requirement. The

proposed plan would reduce living space, eliminate a bedroom, and either

eliminate one bathroom or change it from a full to a half bath. The

proposal was made by the DIPOA vice president, who is also an engineer.

He testified that the Englunds could reuse some of the lumber from the

house to save costs in switching to the alternate plan. He stated that,

from an engineering standpoint, the modifications "might not be difficult

at all." He declined to testify about the costs of the proposed

modifications.

Dyann testified that the house was currently 2,500 square feet and

that the DIPOA proposal would reduce it to 1,800 square feet. She and

Rodney testified that they estimated that the value of the completed

house would thus be reduced by $300,000 to $350,000. Dyann believed

25 SC-2024-0414; SC-2024-0437

that the house would be harder to sell or rent because most people who

come to Dauphin Island visit with big families and prefer more bedrooms

and bathrooms. The reduction in space, she testified, would also interfere

with their own plans for the house because their entire family could not

stay there at one time.

Rodney testified that the DIPOA's proposed plan was not workable

because it required changes to load-bearing walls, required

reconfiguration of too many spaces, and created difficulties resulting

from fortification requirements. He believed that materials, once

removed, could not be reused. He and Dyann had prepared estimates

showing details about the costs of tearing down the house and rebuilding

back to their current stage of construction. The estimates showed that

the cost to the Englunds would be $200,000 or more.

The Englunds acknowledged that they could rebuild with a second

level to keep the square footage and number of bedrooms and bathrooms

they desired. They believed, however, that doing so would be more

expensive because the entire roof would have to be removed. Also, a

second level would be less practical for them because of their age. Rodney

was 71 years old at the time of trial. Rodney testified that, during the

26 SC-2024-0414; SC-2024-0437

course of the litigation, the house had deteriorated because of exposure

to the elements and its unfinished state.

The Englunds presented evidence indicating that most decks,

patios, and pools in their neighborhood extend beyond the 90-foot

setback. Based on the plain language of the Silver Cay II covenant, they

argue that those structures are prohibited and that the consistent

violations have caused a change in the neighborhood, such that the

covenant does not serve a legitimate purpose anymore. The DIPOA says

that it interprets the covenant to prohibit only structures with roofs.

Knizley testified that the neighborhood has no commercial development

and that it remains a quiet, residential neighborhood. Thus, the DIPOA

argues that there has been no change in the nature of the neighborhood.

Standard of Review

" 'The ore tenus standard of review generally applies to judgments entered following a bench trial.' R & G, LLC v. RCH IV-WB, LLC, 122 So. 3d 1253, 1256 (Ala. 2013).

" 'Under the ore tenus standard of review, findings on disputed facts are presumed correct, and the trial court's judgment based on those findings will not be reversed unless the judgment is palpably erroneous or manifestly unjust. Southside Cmty. Dev. Corp. v. White, 10 So. 3d 990, 991 (Ala. 2008). " ' " 'The presumption of correctness, however, is

27 SC-2024-0414; SC-2024-0437

rebuttable and may be overcome where there is insufficient evidence presented to the trial court to sustain its judgment.' " ' " 10 So. 3d at 991-92 (quoting Retail Developers of Alabama, LLC v. East Gadsden Golf Club, Inc., 985 So. 2d 924, 929 (Ala. 2007), quoting in turn Waltman v. Rowell, 913 So. 2d 1083, 1086 (Ala. 2005), quoting in turn Dennis v. Dobbs, 474 So. 2d 77, 79 (Ala. 1985)).'

"Lawson v. Harris Culinary Enters., LLC, 83 So. 3d 483, 491 (Ala. 2011).

"Under the ore tenus standard, 'when a trial court makes no specific findings of fact, "this Court will assume that the trial judge made those findings necessary to support the judgment." ' New Props., L.L.C. v. Stewart, 905 So. 2d 797, 799 (Ala. 2004) (quoting Transamerica Commercial Fin. Corp. v. AmSouth Bank, N.A., 608 So. 2d 375, 378 (Ala. 1992)). 'Additionally, we note that "the ore tenus standard is inapplicable 'where the evidence is undisputed, or where the material facts are established by the undisputed evidence.' Salter v. Hamiter, 887 So. 2d 230, 234 (Ala. 2004)." Burkes Mechanical[, Inc. v. Ft. James-Pennington, Inc.], 908 So. 2d [905,] 910 [(Ala. 2004)]. In such cases, appellate review is de novo. Id.' Lawson, 83 So. 3d at 491."

Merchants Bank v. Head, 161 So. 3d 1151, 1153-54 (Ala. 2014).

As to the DIPOA's cross-appeal from the trial court's denial of its

request for attorney fees: "Whether to award or to deny attorney fees lies

within the sound discretion of the trial court. On appeal, the trial court's

ruling on that question is subject to reversal only upon a showing of abuse

28 SC-2024-0414; SC-2024-0437

of discretion." Battle v. City of Birmingham, 656 So. 2d 344, 347 (Ala.

1995).

Analysis

I. The Appeal (Case No. SC-2024-0414)

On appeal, the defendants argue that the trial court erred by failing

to apply their affirmative defenses to preclude enforcement of the

restrictive covenants against them. Alternatively, they argue that the

trial court erred by failing to apply its conclusion that the restrictive

covenants should be enforced to require the DIPOA also to enforce them

against the Coales.

The permanent injunction sought by the DIPOA is based in equity.

" ' "To be entitled to a permanent injunction, a plaintiff must demonstrate success on the merits, a substantial threat of irreparable injury if the injunction is not granted, that the threatened injury to the plaintiff outweighs the harm the injunction may cause the defendant, and that granting the injunction will not disserve the public interest."

" 'TFT, Inc. v. Warning Sys., Inc., 751 So. 2d 1238, 1242 (Ala. 1999), overruled on another point of law, Holiday Isle, LLC v. Adkins, 12 So. 3d 1173 (Ala. 2008).' "

29 SC-2024-0414; SC-2024-0437

Walden v. ES Capital, LLC, 89 So. 3d 90, 105 (Ala. 2011) (quoting

Sycamore Mgmt. Grp., LLC v. Coosa Cable Co., 42 So. 3d 90, 93 (Ala.

2010)).

Regarding permanent injunctions involving restrictive covenants,

we have recently explained:

"Our Court has previously recognized that, as a general matter, 'restrictive covenants are not favored in the law and will therefore be strictly construed by this Court.' Lange v. Scofield, 567 So. 2d 1299, 1301 (Ala. 1990). 'All doubts must be resolved against the restriction and in favor of free and unrestricted use of the property.' Id.

"However, when the language of a restrictive covenant is not 'of doubtful meaning [or] ambiguous,' the language of that covenant 'is entitled to be given the effect of its plain and manifest meaning.' Laney v. Early, 292 Ala. 227, 231-32, 292 So. 2d 103, 107 (1974). 'If "there is no inconsistency or ambiguity within a restrictive covenant, the clear and plain language of the covenant is enforceable by injunctive relief." ' Hipsh v. Graham Creek Estates Owners Ass'n, 927 So. 2d 846, 848 (Ala. Civ. App. 2005) (quoting Carpenter v. Davis, 688 So. 2d 256, 258 (Ala. 1997)). That proposition of law takes precedence over the disfavor that our Court has previously shown toward restrictions of the use of land. Laney, 292 Ala. at 231, 292 So. 2d at 106-07.

"In Tubbs v. Brandon, 374 So. 2d 1358, 1361 (Ala. 1979), this Court stated:

" 'When a restrictive covenant is broken, ... an injunction should be issued because the mere breach of the covenant is a sufficient basis for interference by injunction. The right to enjoin 30 SC-2024-0414; SC-2024-0437

such a breach will not depend upon whether the covenantee will be damaged by the breach. Reetz v. Ellis, 279 Ala. 453, 186 So. 2d 915 (1966).' "

Cole v. Davis, 383 So. 3d 646, 653 (Ala. 2023) (emphasis omitted).

The DIPOA asserts that defendants have violated two restrictive

covenants: the 90-foot setback requirement of the Silver Cay II restrictive

covenants and the requirement for DIPOA approval incorporated into

those covenants from the green sheets.3 Both restrictive covenants are

unambiguous. Moreover, the evidence is undisputed that the Englunds

have built the house on Lot 23 beyond the 90-foot setback and that they

did not obtain approval from the DIPOA before beginning construction.

Thus, the restrictive covenants are enforceable by injunctive relief. The

defendants do not challenge these points on appeal.

3On appeal, the defendants argue that the document the DIPOA

submitted as the "green sheet" was not authenticated and thus has not been proved to be the recorded restrictive covenants applicable to Lot 23. See note 2, supra. The defendants assert this argument solely in reply to the DIPOA's cross-appeal about its attorney fees. The DIPOA has moved to strike that portion of the defendants' reply brief. Because the defendants do not otherwise challenge the DIPOA's authority to enforce the Silver Cay II covenants or its authority to issue permits, we need not address the motion to strike as it pertains to the arguments asserted in the defendants' appeal. 31 SC-2024-0414; SC-2024-0437

Instead, the defendants argue on appeal that the trial court erred

by failing to apply their affirmative defense that the imposition of a

permanent injunction against the Englunds would cause them great

hardship that outweighs any benefit of the restrictive covenant to the

DIPOA. We refer to this defense as "the relative-hardship test." Among

other arguments, the defendants raised the applicability of the relative-

hardship test in their posttrial brief. As noted above, although the trial

court's judgment acknowledged that the defendants had asserted

affirmative defenses, it did not explicitly address the relative-hardship

test in its judgment. Accordingly, the trial court appears to have

implicitly rejected it.

This Court recently summarized the relative-hardship test as

follows:

"Although, as noted earlier, the breach of a restrictive covenant is, by itself, enough to warrant the issuance of an injunction, in Lange [v. Scofield, 567 So. 2d 1299 (Ala. 1990),] this Court stated that enforcement of covenants running with land ' "is governed by equitable principles, and will not be decreed if, under the facts of the particular case, it would be inequitable and unjust." ' 567 So. 2d at 1302 (quoting 20 Am. Jur. 2d Covenants, Conditions & Restrictions § 313 (1965)).

"….

32 SC-2024-0414; SC-2024-0437

"If ' "the restrictive covenant has ceased to have any beneficial or substantial value" ' or ' "the defendant will be subject to great hardship or the consequences would be inequitable," ' a court, applying equitable principles, of equity will not enforce the covenant. Id. (citation omitted).

"In Lange, this Court explained:

" ' "The equitable enforcement of a restriction can be invoked only for the purpose of protecting the benefit which it was the object of the covenant to afford. If the restrictive covenant has ceased to have any beneficial or substantial value to the ... property, it can form no ground for equitable relief .... [I]f the defendant will be subject to great hardship or the consequences would be inequitable, relief will be denied." '

"Id. (citation omitted)."

Cole, 383 So. 3d at 653-54.

Before considering any hardship to the Englunds caused by the

imposition of the trial court's permanent injunction, we must first

address Rodney's knowledge of the restrictive covenants at issue. The

DIPOA rightly argues that, having built houses on Dauphin Island

previously, Rodney had actual knowledge of the requirement to obtain

the DIPOA's approval before beginning construction. Thus, the DIPOA

insists that, by failing to obtain a DIPOA permit, the Englunds

deliberately sought to flout and undermine the DIPOA's authority. 33 SC-2024-0414; SC-2024-0437

Based on the ore tenus standard of review, the DIPOA argues that the

trial court made a credibility determination on this issue regarding

Englunds' motives that is entitled to deference.

Before this Court's decision in Cole, supra, the Court of Civil

Appeals had used evidence of a party's knowledge of a restrictive

covenant, whether actual or constructive, as a reason to deny application

of the relative-hardship test. See, e.g., Grove Hill Homeowners' Ass'n v.

Rice, 90 So. 3d 731, 739 (Ala. Civ. App. 2011); Maxwell v. Boyd, 66 So. 3d

257 (Ala. Civ. App. 2010). Those decisions indicating that knowledge

could preclude consideration of the parties' relative hardships were based

on application of the clean-hands doctrine. See Grove Hill, 90 So. 3d at

739; Maxwell, 66 So. 3d at 737. Thus, we will examine the clean-hands

doctrine as it relates to the facts of this case.

A. The Clean-Hands Doctrine

In Cole, this Court explained that a party's knowledge is merely one

factor for consideration in applying principles of equity to balance the

relative hardships between the parties.

"[T]his Court has not developed or applied a hard and fast rule preventing a party from relying on the relative-hardship defense in situations in which that party violated a covenant of which it had notice. Instead, a party's knowledge -- 34 SC-2024-0414; SC-2024-0437

constructive or actual -- of a restrictive covenant should simply be one factor for a trial court's consideration in determining whether the resultant harm from enforcement of a restrictive covenant 'would be considerably disproportionate to the benefit received by the landowner seeking enforcement' of the covenant. Grove Hill, 90 So. 3d at 737. See, e.g., id. at 742 (Bryan, J., dissenting) ('I would hold that a trial court should consider a party's knowledge of a restrictive covenant as a factor in applying the relative-hardship test rather than holding that such knowledge precludes the application of the test.'). Indeed, under virtually every circumstance, a property owner would have at least constructive notice of a recorded restrictive covenant, and thus the bright-line rule adopted by the Court of Civil Appeals would read the relative-hardship defense out of existence."

Cole, 383 So. 3d at 654-55.

Thus, in relevant part, Cole stands for the proposition that a party's

knowledge of a restrictive covenant does not, as matter of law, foreclose

that party from invoking the relative-hardship test as a defense to a

claim seeking permanent injunctive relief. Put another way, such

knowledge alone does not demonstrate unclean hands as a matter of law

so as to prevent a balancing of the factors under the relative-hardship

test.

In J & M Bail Bonding Co. v. Hayes, 748 So. 2d 198, 199 (Ala. 1999),

we explained the following regarding the clean-hands doctrine:

"This Court has recognized that one 'who seek[s] equity must do equity' and 'one that comes into equity must come 35 SC-2024-0414; SC-2024-0437

with clean hands.' Levine v. Levine, 262 Ala. 491, 494, 80 So. 2d 235, 237 (1955). The purpose of the clean hands doctrine is to prevent a party from asserting his, her, or its rights under the law when that party's own wrongful conduct renders the assertion of such legal rights 'contrary to equity and good conscience.' Draughon v. General Fin. Credit Corp., 362 So. 2d 880, 884 (Ala. 1978). The application of the clean hands doctrine is a matter within the sound discretion of the trial court. Lowe v. Lowe, 466 So. 2d 969 (Ala. Civ. App. 1985)."

In Weaver v. Pool, 249 Ala. 644, 648, 32 So. 2d 765, 768 (1947), this Court

stated:

"[T]he [clean-hands] maxim refers to willful misconduct rather than merely negligent misconduct and must be morally reprehensible as to known facts. Furthermore, equity will consider the conduct of the adversary, the requirements of public policy and the relation of the misconduct to the subject matter of the suit and to defendant. 30 C.J.S., Equity, § 98."

See also Retail Devs. of Alabama, LLC v. East Gadsden Golf Club, Inc.,

985 So. 2d 924, 932 (Ala. 2007) (" '[T]he doctrine of unclean hands … finds

expression in specific acts of willful misconduct' " that are " 'morally

reprehensible as to known facts.' Sterling Oil of Oklahoma, Inc. v. Pack,

291 Ala. 727, 746, 287 So. 2d 847, 864 (1973) (citing Weaver v. Pool, 249

Ala. 644, 32 So. 2d 765 (1947)).").

Thus, regarding whether the defendants can invoke the relative-

hardship test as a matter of equity under the clean-hands doctrine, the

36 SC-2024-0414; SC-2024-0437

question presented is not simply whether Rodney had knowledge of the

restrictive covenants at issue or even whether he engaged in negligent

misconduct. Instead, the question is whether the defendants' actions

"r[o]se to the level of morally reprehensible, willful misconduct." Retail

Devs., 985 So. 2d at 932. Moreover, the DIPOA's conduct and its relation

to the subject matter of the action are also relevant to the clean-hands

inquiry. See Weaver, 249 Ala. at 648, 32 So. 2d at 768.

In considering the clean-hands doctrine, we first note that the trial

court's judgment did not expressly find that the defendants had unclean

hands. However, we will evaluate the evidence presented to determine

whether it could have supported such an implicit determination by the

trial court.

As noted above, Rodney testified that he asked the Town's permit

clerk whether it was necessary for him to deliver materials separately to

the DIPOA. Rodney testified that she stated that the Town would deliver

his materials to the DIPOA and that the DIPOA would be in touch with

him. Although the DIPOA notes that the trial court could have

disbelieved Rodney's testimony in this regard, we also note that the

DIPOA did not present evidence that conflicted with Rodney's testimony.

37 SC-2024-0414; SC-2024-0437

Indeed, other evidence confirmed Rodney's testimony. The head of the

Town's permit department testified that it was, in fact, Town policy at

the time to collect two sets of plans from applicants, one for the Town and

one for the DIPOA. He also stated that it was possible that a permit clerk

had told Rodney that the Town would send a copy of his permit

application to the DIPOA.

On appeal, the parties argue over the validity of the one-stop

agreement. The defendants maintain that, by the terms of the one-stop

agreement, the Town and the DIPOA each had duties under the

agreement -- the Town to deliver the Englunds' application and the

DIPOA to pick up their application -- thus relieving the Englunds of any

further responsibility to obtain the DIPOA's approval. The DIPOA

maintains that the one-stop agreement was not followed consistently by

it or the Town, was a "gentlemen's agreement" at best, and that the Town

had breached the agreement, thus relieving the DIPOA of any

responsibility to perform.

We find neither argument entirely persuasive. First, the Town's

breach identified by the DIPOA was its decision not to withhold issuance

of its own permits based on violations of restrictive covenants enforceable

38 SC-2024-0414; SC-2024-0437

by the DIPOA. That requirement does not appear in the most recent

1997 version of the one-stop agreement made part of the record in this

case. Thus, the DIPOA has shown no breach of that agreement by the

Town. Second, the 1997 agreement requires termination by written

notice, which it is undisputed that neither the Town nor the DIPOA had

ever provided. Finally, regardless of how well they did so, both the Town

and the DIPOA continued until the time of trial to operate according to

the terms of the agreement, the Town collecting plans and applications

for the DIPOA and the DIPOA making arrangements to receive them

regularly. Thus, the one-stop agreement did impose responsibilities on

both the Town to collect information from the Englunds and the DIPOA

to retrieve and review that information within 14 days.

That both the Town and the DIPOA failed in these responsibilities

is significant. However, the one-stop agreement did not wholly relieve

the Englunds of responsibility to ensure that they obtained a DIPOA

permit, as the defendants suggest. Nothing in the one-stop agreement

removes the requirement for DIPOA approval before property owners

begin construction.

39 SC-2024-0414; SC-2024-0437

However, we conclude that the totality of the evidence presented

regarding the Englunds' application to the Town and the history of the

one-stop agreement does not support a determination that the

defendants' actions "r[o]se to the level of morally reprehensible, willful

misconduct." Retail Devs., 985 So. 2d at 932. Even if the relevant

evidence presented would support a conclusion that Rodney had acted

carelessly and without sufficient diligence to obtain the DIPOA's

approval before beginning construction and had, therefore, engaged in

negligent misconduct, such misconduct is insufficient to support a finding

of unclean hands. See Weaver, 249 Ala. at 648, 32 So. 2d at 768

Regarding Rodney's subsequent conduct, we note that Rodney

testified that he did have windows and doors installed in the house,

which, he said, were delivered on the day he received the DIPOA's stop-

work order. However, he explained that he did so to prevent loss of the

materials and otherwise stopped work on the house. The DIPOA did not

present evidence conflicting with this explanation. After the DIPOA filed

suit, Rodney asked the Court's permission to proceed with limited

additional work to prevent damage to the house. The DIPOA conceded,

and the trial court granted that permission. Otherwise, the defendants

40 SC-2024-0414; SC-2024-0437

have complied with DIPOA's stop-work order, such that the house has

deteriorated during the progress of the court proceedings.

The DIPOA argues on appeal that the Englunds intended to build

wherever they wanted on Lot 23, regardless of any covenants enforced by

the DIPOA. This certainly was the speculation of the DIPOA's own

witnesses about Rodney's motives. However, they did not testify to

anything they observed Rodney say or do that supported their opinions

beyond the bare fact that he had knowledge that the DIPOA required an

application. Thus, no other evidence shows that the Englunds' motive

was to purposely and willfully violate the Silver Cay II setback

requirement.

Moreover, the testimony of Knizley and Bay indicates that they

were aware of the ongoing construction on Lot 23, for which it is

undisputed the DIPOA had not given prior approval. Therefore, the

defendants' construction activities were not hidden or concealed from the

DIPOA and the DIPOA did not immediately issue a stop-work order. In

short, we conclude that the evidence presented does not support a

determination that the defendants' actions in constructing the Englunds'

house before seeking a variance from the DIPOA "r[o]se to the level of

41 SC-2024-0414; SC-2024-0437

morally reprehensible, willful misconduct." Retail Devs., 985 So. 2d at

932. Accordingly, based on the evidence presented, the trial court could

not have properly concluded that the defendants were barred by the

clean-hands doctrine from invoking the relative-hardship test in defense

of the DIPOA's action seeking a permanent injunction. Although, as

already noted, the trial court's judgment did not expressly make such a

determination, to the extent that it did so implicitly, we conclude that its

judgment in that regard is palpably erroneous or manifestly unjust. See

Merchants Bank, 161 So. 3d at 1154.

B. Breach Alone as a Basis for Permanent Injunction

Briefly, we also note the DIPOA's reliance on Tubbs v. Brandon,

374 So. 2d 1358 (Ala. 1979), cited by this Court in Cole, for the proposition

that a mere breach of a restrictive covenant provides a sufficient basis for

the issuance of a permanent injunction. As quoted in Cole, the Tubbs

decision had explained:

" 'When a restrictive covenant is broken, ... an injunction should be issued because the mere breach of the covenant is a sufficient basis for interference by injunction. The right to enjoin such a breach will not depend upon whether the covenantee will be damaged by the breach. Reetz v. Ellis, 279 Ala. 453, 186 So. 2d 915 (1966).' " Cole, 383 So. 3d at 653 (emphasis added in Cole).

42 SC-2024-0414; SC-2024-0437

This statement in Tubbs describes the burden on the party seeking

enforcement of a restrictive covenant. Thus, under the second prong of

the requirements for obtaining a permanent injunction, the party seeking

enforcement of a restrictive covenant need not show actual damage by

the breach; the breach in and of itself is sufficient to satisfy that element.

See Walden, 89 So. 3d at 105 (" ' "To be entitled to a permanent injunction,

a plaintiff must demonstrate [1] success on the merits, [2] a substantial

threat of irreparable injury if the injunction is not granted, [3] that the

threatened injury to the plaintiff outweighs the harm the injunction may

cause the defendant, and [4] that granting the injunction will not disserve

the public interest." ' ")(Citations omitted)).

However, as already noted above, the Cole Court also clearly stated:

"Although, as noted earlier, the breach of a restrictive covenant is, by itself, enough to warrant the issuance of an injunction, in Lange [v. Scofield, 567 So. 2d 1299 (Ala. 1990),] this Court stated that enforcement of covenants running with land ' "is governed by equitable principles, and will not be decreed if, under the facts of the particular case, it would be inequitable and unjust." ' 567 So. 2d at 1302 (quoting 20 Am. Jur. 2d Covenants, Conditions & Restrictions § 313 (1965))."

383 So. 3d at 653.

43 SC-2024-0414; SC-2024-0437

Thus, the affirmative defense based on relative hardship is a

separate question that takes into consideration harm caused to the

defendant and, thus, more closely relates to the third prong of the

requirements for a permanent injunction. See Grove Hill, 90 So. 3d at

741 (Bryan, J., dissenting) ("[T]he relative-hardship test is very similar

to the third element of the permanent-injunction standard …."). As a

matter of equity, the Court must ask if the benefit that the plaintiff might

receive by effectuating the intended purpose of the restrictive covenant

at issue outweighs the harm that permanent injunctive relief will cause

to the defendant. See Cole, supra, and Lange v. Scofield, 567 So. 2d 1299

(Ala. 1990). Thus, the defendants' breach of the pertinent restrictive

covenants alone does not, in and of itself, satisfy all the required elements

for obtaining a permanent injunction. Consequently, we will proceed to

examine the relative-hardship test under the facts of this case.

C. The Relative-Hardship Test

As noted, although the trial court's judgment acknowledged that

the defendants had asserted affirmative defenses, it did not expressly

address the relative-hardship test. Accordingly, it appears that the trial

court implicitly rejected it. Therefore, we must evaluate whether the

44 SC-2024-0414; SC-2024-0437

evidence presented could have supported such an implicit determination

by the trial court.

In Cole, we stated the following regarding the relative-hardship

test:

" '[I]f, upon a balancing of the equities, a court determines that the harm resulting to one landowner from the enforcement of a restrictive covenant would be considerably disproportionate to the benefit received by the landowner seeking enforcement, a court may decline to afford the landowner seeking enforcement the equitable relief of an injunction to redress a breach of the restrictive covenant.'

"Grove Hill Homeowners' Ass'n v. Rice, 90 So. 3d 731, 737 (Ala. Civ. App. 2011). We note, however, that the relative- hardship defense is an affirmative one, and, thus, the burden is on the party asserting the defense."

Cole, 383 So. 3d at 654. Thus, we first consider the evidence presented

regarding the harm caused to the Englunds by the enforcement of the

restrictive covenants at issue and then balance that harm against the

benefits afforded to the DIPOA by such enforcement.

1. Harm to the Englunds

The defendants presented evidence indicating that tearing down

the house on Lot 23 and rebuilding it to its current state of construction

would cost in excess of $200,000. They also presented evidence indicating 45 SC-2024-0414; SC-2024-0437

that reducing the square footage, to the degree proposed by the DIPOA,

would interfere with the Englunds' intended use of the house as a family

gathering place or a vacation rental. The Englunds estimated that the

reduction in square footage would reduce the value of the completed

house by approximately $350,000. To rebuild with a second level would

cost more than $200,000 and would interfere with the Englunds' intended

purpose of having one level for ease of use as they grow older.

Notably, the DIPOA's vice president, who was also an engineer,

testified that, from an engineering standpoint, making the modifications

suggested by the DIPOA "might not be difficult at all." However, the

DIPOA did not present evidence contesting the Englunds' monetary

estimates.

Even if the trial court determined that the Englunds' had

overestimated the costs of bringing the house into compliance with the

setback requirement, it is undisputed that doing so will require

modifications to alter the existing structure. The resulting harm from

doing so must be weighed against the benefits to the DIPOA that the

restrictive covenants were allegedly intended to protect.

46 SC-2024-0414; SC-2024-0437

2. Benefits to the DIPOA

As noted above, the DIPOA has identified two restrictive covenants

and corresponding benefits that the covenants were allegedly designed to

protect. We consider each in turn, remaining mindful of the following

principles:

"Concerning the construction of restrictive covenants, we have said:

" '[A]ll doubts must be resolved against the restriction and in favor of free and unrestricted use of property. However, effect will be given to the manifest intent of the parties when that intent is clear and the restrictions are confined to a lawful purpose within reasonable bounds, and rights created by covenants have not been relinquished or otherwise lost. Wisneiwski v. Starr, 393 So. 2d 488 (Ala. 1980). Furthermore, restrictive covenants are to be construed according to the intent of the parties in the light of the terms of the restriction and surrounding circumstances known to the parties. Kennedy v. Henley, 293 Ala. 657, 309 So. 2d 435 (1975).'

"Hines v. Heisler, 439 So. 2d 4, 5-6 (Ala. 1983)."

Ex parte Odom, 254 So. 3d 222, 227 (Ala. 2017)(emphasis added).

a. The Setback Requirement

As to the Silver Cay II 90-foot setback requirement, the intended

benefit is unclear. No witness remembered the developer's intent at the

47 SC-2024-0414; SC-2024-0437

time the Silver Cay II setback requirement was adopted. The DIPOA's

witnesses supposed the purpose was to preserve views for neighboring

houses. The defendants suggested it was to keep houses a safe distance

from the water line.

Neighbors who testified stated that the Englunds' house, as it

stands, would block their sunset views for part of the year. No neighbor

estimated any value for the loss of those views. Hayes, an immediate

neighbor of the Englunds, stated that he believed the value of his house

would be reduced because of the lost views, although, he said, he could

not provide and amount of the reduced value until he attempted to sell

his house. Personally, he was fine with the Englunds' placement of their

house, so long as his deck was extended for him to maintain his view.

The DIPOA argues that the views of the Englunds' neighbors are

valuable and protectable interests. It cites Lange v. Scofield, 567 So. 2d

1299 (Ala. 1990). However, this Court's opinion in that case did not

address neighboring views at all and instead reviewed a covenant dealing

with the density of construction in a neighborhood. This Court instead

addressed the issue of neighboring views in Stewart v. Secor Realty &

48 SC-2024-0414; SC-2024-0437

Investment Corp., 667 So. 2d 52 (Ala. 1995), and in Gulf House Ass'n v.

Town of Gulf Shores, 484 So. 2d 1061 (Ala. 1986).

In Stewart, this Court considered an action by property owners

against the successor entity to the developer of their subdivision; the

action concerned the construction of a house adjacent to the plaintiffs'

property.

"The [plaintiffs] complain[ed] that the [neighboring] house block[ed] the view from the front windows in their living room and cause[d] their house to be less appealing from the street. The [plaintiffs] also claim[ed] that the [neighborhing] house [wa]s too large for the lot upon which it s[at]. According to the [plaintiffs], the position of the [neighboring] house reduce[d] the value of their house in an amount between $20,000 and $100,000."

Stewart, 667 So. 2d at 54.

The Stewart Court noted that construction of the neighboring house

had complied with setback requirements and restrictive covenants

pertaining to the size of the house and had been approved by the design-

review committee. Regarding the plaintiffs' argument pertaining to their

loss of view, the Stewart Court stated:

"This Court has addressed the issue whether a property owner is entitled to a view. In Gulf House Association, Inc. v. Town of Gulf Shores, 484 So. 2d 1061 (Ala. 1986), a group of condominium owners sought to enjoin the owner of adjacent land from building condominiums because the proposed 49 SC-2024-0414; SC-2024-0437

construction would destroy the view from the plaintiffs' land. This Court held:

" 'The residents of Gulf House have no legal entitlement to a view across the Waters property. In Ray v. Lynes, 10 Ala. 63 (1846), the court said:

" ' "[O]ne who erects a house in a city or town, on the margin of his lot, with a window opening upon the lot of an adjoining proprietor, does not thereby acquire such a right to the use of his window, as to deprive the adjoining proprietor of the right to build on his lot, in any manner his judgment, or fancy may dictate.... [I]t was the folly of the plaintiff to construct his house as to be dependent on the adjoining proprietor, for light and air." '

"484 So. 2d at 1063-64."

667 So. 2d at 54-55.

The Stewart Court went on to analyze the facts of that case as

"The [plaintiffs] argue that Gulf House is distinguishable from the present case because Gulf House involved only the right to a view, whereas the [plaintiffs] are seeking an award of damages for a diminution in value that they allege resulted from the design review committee's failure to enforce the covenants and restrictions regarding the aesthetic compliance and harmonious blending of houses built on adjoining lots in this high-value development. This, under the circumstances alleged and the evidence presented, is a distinction without a difference. The [plaintiffs] complain 50 SC-2024-0414; SC-2024-0437

that the placement of the [neighboring] house diminishes the 'curb appeal' of their house, because the view of the [plaintiffs]' house is partially blocked by the [neighboring] house as one approaches from the west. This amounts to an assertion that the [plaintiffs] are entitled to a view of their property from the street by prospective purchasers; this is even less a property right than that asserted in Gulf House.

"Even within the terms of the broad statements in the restrictive covenants -- to the effect that the covenants are 'for the purpose of enhancing and protecting the value, desirability and attractiveness' of the properties and that the committee is to consider aesthetics, the suitability of the proposed construction, and 'the harmony thereof with the surroundings and the effect of the building or other structure as planned, on the outlook from the adjacent or neighboring property' -- the [plaintiffs] have not presented substantial evidence of breach of contract or negligence."

667 So. 2d at 55.

Stewart is different from the present case because that case

involved different causes of action and the construction at issue in that

case had complied with the restrictive covenants at issue. However,

Stewart is also similar to this case in that one alleged benefit of the

relevant restrictive covenants in both cases is the preservation of a view.

In short, Stewart clearly articulates the general rule under

Alabama law that property owners have no legal right to a view. In the

present case, we do not hold that a right to a view can never be protected

through the use of restrictive covenants burdening land. However, in 51 SC-2024-0414; SC-2024-0437

light of the ambiguity in the present case regarding the original purpose

of the setback requirement; the lack of specific evidence regarding a

diminution in value to surrounding property owners resulting from the

defendants' violation of the setback requirement; the acquiescence to the

defendants' construction by the Englunds' adjacent neighbor; and of the

recommendation to approve the Englunds' variance by the DIPOA's own

architectural committee, we conclude that the harm to the Englunds

caused by a permanent injunction is considerably disproportionate to the

benefit received by the DIPOA as to the violation of the Silver Cay II

setback requirement.

b. The DIPOA Approval Requirement

Regarding the defendants' violation of the restrictive covenant

requiring DIPOA approval before beginning construction, the benefit

protected by that covenant is for all property owners on Dauphin Island,

not the DIPOA itself. At the time the DIPOA was granted its authority

to enforce restrictive covenants, the Town did not exist. Thus, the DIPOA

provided a means of enforcement where none had existed and

enforcement that would be uniform across Dauphin Island. The Town

now enforces its own ordinances, not restrictive covenants.

52 SC-2024-0414; SC-2024-0437

Thus, the DIPOA's exercise of its authority still provides a benefit

to property owners on Dauphin Island. Importantly, according to its

green sheets, any failure by the DIPOA to enforce a restrictive covenant

does not waive the DIPOA's authority to do so in the future. See also

Dauphin Island Prop. Owners Ass'n v. Kuppersmith, 371 So. 2d 31, 32,

34 (Ala. 1979) (noting that 1953 restrictions provide that the DIPOA's

failure to enforce any restriction does not waive its right to enforce

thereafter and holding that the DIPOA's acquiescence in violation of one

restriction did not estop its enforcement of other restrictions).

The reasons given by members of the DIPOA board who testified

showed an intent to punish the Englunds for their failure to obtain a

DIPOA permit before beginning construction and thus flouting the

DIPOA's authority. DIPOA witnesses testified to their fear that the

Englunds' failure to obtain a permit will "set a bad precedent" and lead

others to deliberately do so in the future. However, the DIPOA still

retains authority to enforce restrictive covenants because its failure to do

so with regard to a particular violation does not deprive the DIPOA of

any power to enforce them in the future.

53 SC-2024-0414; SC-2024-0437

Moreover, at trial, Bay testified that he was aware of the

construction on Lot 23 in August 2022 but did not obtain a list of permits

that the Town had issued, although he stated that he could have. At

trial, Bay testified that he had begun checking that list regularly as a

result of the circumstances giving rise to this case. Therefore, we

conclude that any benefit to the DIPOA regarding precedent and future

enforcement of its restrictive covenants is also considerably

disproportionate to the harm resulting to the Englunds from having to

tear down, reconfigure, and rebuild their house.

D. Conclusion

Because the evidence presented in this case demonstrates that any

benefit received by the DIPOA through a permanent injunction is

considerably disproportionate to the harm resulting to the Englunds from

having to tear down, reconfigure, and rebuild their house, we conclude

that the trial court's failure to apply the relative-hardship test to deny

the DIPOA's request for a permanent injunction was palpably erroneous

or manifestly unjust. See Merchants Bank, 161 So. 3d at 1154. Because

we reverse the trial court's judgment and render a judgment in the

defendants' favor on this basis, we pretermit consideration of the

54 SC-2024-0414; SC-2024-0437

defendants' alternative argument regarding alleged changes in the

neighborhood. Moreover, we need not address the trial court's denial of

the Englunds' counterclaim, which the Englunds solely asserted as an

alternative basis for relief if their affirmative defenses were denied.

II. The Cross-Appeal (Case No. SC-2024-437)

In its cross-appeal, the DIPOA argues that the trial court erred in

failing to grant its requests for attorney fees. However, because we have

reversed the trial court's judgment and rendered a judgment in favor of

the defendants, the cross-appeal is moot and need not be addressed. See

American Petroleum Equip. & Constr. Inc. v. Fancher, 708 So. 2d 129,

133 (Ala. 1997). Likewise, we need not resolve the DIPOA's motion to

strike certain arguments made by the defendants as to the DIPOA's

authority to receive attorney fees under the green sheets, and we have

denied that motion as moot by separate order.

SC-2024-0414 -- REVERSED AND JUDGMENT RENDERED.

SC-2024-0437 -- APPEAL DISMISSED.

Stewart, C.J., and Shaw, Wise, Sellers, Mendheim, McCool, and

Lewis, JJ., concur.

55 SC-2024-0414; SC-2024-0437

Cook, J., concurs specially, with opinion.

56 SC-2024-0414; SC-2024-0437

COOK, Justice (concurring specially).

I concur fully with the main opinion. I write specially, however, to

emphasize for the Bench and the Bar that cases involving restrictive

covenants, like the case now before us, must be judged on the unique set

of facts presented in each case. See Lange v. Scofield, 567 So. 2d 1299,

1302 (Ala. 1990) (quoting 20 Am. Jur. 2d Covenants, Conditions, &

Restrictions § 313, at 876-77 (1965)) (" 'Broadly speaking, the

enforcement of building restrictions is governed by equitable principles,

and will not be decreed if, under the facts of the particular case, it would

be inequitable and unjust ....' " (emphasis added)).

As explained thoroughly in the main opinion, the undisputed

evidence shows, among other things, that Rodney G. Englund and Dyann

K. Englund have built their vacation home on Lot 23 beyond the 90-foot

setback requirement set forth in the Silver Cay II restrictive covenant.

Although the purpose of this setback requirement is unclear, the

witnesses for the Dauphin Island Property Owners Association ("the

DIPOA") supposed that the purpose was to preserve views for

neighboring houses.

This Court has previously addressed the issue of neighboring views

57 SC-2024-0414; SC-2024-0437

in Stewart v. Secor Realty & Investment Corp., 667 So. 2d 52 (Ala. 1995),

and has articulated the general rule under Alabama law that property

owners have no legal right to a view. However, Stewart does not mean

that a view could never be protected through a restrictive covenant. And

the main opinion makes clear that it is not so holding here.

Rather, the unique facts of this case compel us to conclude that any

benefit that may be created by the setback requirement for preserving

neighboring views on Dauphin Island is considerably disproportionate to

the harm caused to the Englunds by a permanent injunction. Among

other things, ambiguity in the present case regarding the original

purpose of the setback requirement; a lack of specific evidence regarding

a diminution in value to surrounding property owners resulting from the

Englunds' violation of the setback requirement; acquiescence to the

Englunds' construction by their adjacent neighbors; and a

recommendation to approve the Englunds' variance by the DIPOA's own

architectural committee all indicate that the harm to the Englunds

caused by a permanent injunction is considerably disproportionate to any

such benefit in this case. A different set of facts very well could have

yielded a different result here.

58 SC-2024-0414; SC-2024-0437

Because the unique facts in this case drive the outcome here, we

must reverse the issuance of the injunction. It is for this reason that I

concur with the main opinion.