Preview:

FOR PUBLICATION

ATTORNEY FOR APPELLANT: SCOTT A. TANNER Tanner Law Group Indianapolis, Indiana

ATTORNEYS FOR APPELLEES: JUDSON G. BARCE HUNTER J. REECE BONNIE J. ADAMS Barce & Reece, P.C. Fowler, Indiana

FILED
Feb 07 2012, 9:23 am
of the supreme court, court of appeals and tax court

IN THE COURT OF APPEALS OF INDIANA
BENJAMIN CROSSING HOMEOWNERS ASSOCIATION, INC., Appellant-Plaintiff, vs. ROSE HEIDE and DAVID F. WILKERSON, Appellees-Defendants. ) ) ) ) ) ) ) ) ) )

CLERK

No. 79A04-1103-PL-185

APPEAL FROM THE TIPPECANOE SUPERIOR COURT The Honorable Thomas H. Busch, Judge Cause No. 79D02-0810-PL-40

February 7, 2012

OPINION - FOR PUBLICATION

NAJAM, Judge

STATEMENT OF THE CASE Rose Heide and David F. Wilkerson, residents of a planned unit development in Tippecanoe County called Benjamin Crossing, filed a complaint seeking damages and a declaratory judgment that the Tippecanoe Area Building Commission ("Building Commission") and the Benjamin Crossing Homeowners Association ("Homeowners Association" or "the Association") could not enforce a restrictive covenant to prohibit the operation of a child care home in their respective residences in Benjamin Crossing. The restrictive covenant was also incorporated into the planned unit development ordinance for Benjamin Crossing, but state law prohibits enforcement of a zoning ordinance that prohibits the operation of a child care home in a residence. The Homeowners Association filed a counterclaim seeking an injunction to prohibit Heide and Wilkerson from operating child care homes in their residences. The Homeowners Association then filed a motion for summary judgment on the counterclaim. The trial court granted summary judgment in favor of Heide and

Wilkerson on the Associations counterclaim, and the Homeowners Association now appeals. The Association presents the following issue for review: whether the trial court erred when it concluded that the Homeowners Association may not enforce restrictive covenants prohibiting the operation of a child care home in the planned unit development where the planned unit development ordinance that adopted the covenants may not be enforced under state law. We reverse and remand with instructions.

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FACTS AND PROCEDURAL HISTORY In early 2003, C.P. Morgan Communities, L.P. and C.P. Morgan Investment Co., as members of Benjamin Crossing LLC ("Developer"), executed the Declaration of Covenants, Conditions and Restrictions for Benjamin Crossing ("the Declaration"). The Declaration in part sets forth the restrictive covenants for Benjamin Crossing, a planned unit development ("PUD") and residential subdivision in Tippecanoe County. On March 5, 2003, the Tippecanoe Area Plan Commission ("Plan Commission") gave final approval for Section 1 of the PUD when it passed Resolution PD 03-03. That resolution also approved the Declaration. Resolution PD 03-03 and the Declaration were recorded simultaneously on March 7, 2003, in the Tippecanoe County Recorders Office. Regarding the establishment of the Homeowners Association, the Declaration provides, in part: Section 1.2 "Association" shall mean Benjamin Crossing Homeowners Association, Inc., or an entity of similar name, its successors and assigns, which shall be created as an Indiana nonprofit corporation formed or to be formed under the Indiana Nonprofit Corporation Act of 1991, as amended. *** Section 4.1 Organization of Association. The Association shall be organized as a nonprofit corporation under the laws of the State of Indiana, to be operated in accordance with the Articles of Incorporation which have been filed or will be filed by Developer, and the Code of By-Laws of the Association. *** Section 4.3 General Duties of the Association. The Association . . . shall also have the right, but not the obligation[,] to act on behalf of any Owner or Owners in seeking enforcement of the terms, covenants, conditions and restrictions contained in the Plats. . . .
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Appellants App. at 61, 70-71 (emphasis added). The Declaration further provides, in relevant part: Section 7.1 Use of Lots. Except as permitted by Section 7.26[1] hereof, each Lot shall be used for residential purposes only, and no trade or business of any kind may be carried therein. The use of a portion of a Dwelling Unit as an office by an Owner, or his tenant shall not be considered to be a violation of this covenant if Owner is in compliance with Section 7.26 below. No building or structure shall be located on any Lot outside of the setback lines designated on the Plats. *** Section 7.24 Business Uses. No trade or business may be conducted in or from any Lot, except that an Owner or occupant residing in a Dwelling Unit may conduct business activities within the Dwelling Unit so long as: (a) the existence of the business activity is not apparent or detectable by sight, sound or smell from outside the Dwelling Unit; (b) the business activity conforms to all zoning requirements for the Real Estate; (c) the business activity does not involve persons coming onto the Real Estate who do not reside in the Real Estate or door-to-door solicitation of residents of the Real Estate; and (d) the business activity is consistent with the residential character of the Real Estate and does not constitute a nuisance, or a hazardous or offensive use, or threaten the security or safety of other residents of the Real Estate, as may be determined in the sole discretion of the Board. The terms "business" and "trade", as used in this provision, shall be construed to have their ordinary, generally accepted meaning and shall include, without limitation, any occupation, work or activity undertaken on an ongoing basis which involve[s] the provision of goods or services to persons other than the providers family and for which the provider receives a fee, compensation, or other form of consideration, regardless of whether: (i) such activity is engaged in full[-] or part-time; (ii) such activity is intended to or does generate a profit; or (iii) a license is required therefore [sic]. Notwithstanding the above, the leasing of a Lot or Dwelling Unit shall not be considered a trade or business within the meaning of this section. This section does not apply to any commercial property within the Real Estate nor shall it apply to any activity conducted by the Developer or
The reference to Section 7.26 in Section 7.1 of the Declaration is apparently a typographical error. Section 7.26 refers to playground equipment. The reference in Section 7.1 should be to Section 7.24.
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a builder approved by the Developer with respect to its development and sale of the Real Estate or its use of any Lots or Dwelling Units which it owns within the Real Estate. *** Section 8.2 Authority and Enforcement. (a) Upon the violation of this Declaration, the By-Laws, or any rules and regulations duly adopted hereunder, including, without limitation, the failure to timely pay any assessments, the Association shall have the power, after fifteen (15) days[] written notice to the Owner or the occupant of said violation, and failure by said Owner or occupant to cure the violation: (i) to cause the Association to correct the violation at its own cost and expense, which said cost and expense shall constitute a continuing lien upon the Lot of the Owner of the occupant who is guilty of such violation; (ii) to suspend an Owners right to vote in the Association; and (iii) to suspend an Owner or occupants right (and the right of his or her family, guests, and tenants) to use any of the Common Areas. . . . (b) Notwithstanding subsection (a) above, a violation or threatened violation of any of the covenants and restrictions contained in this Declaration and the provisions contained in the Articles of Incorporation and By-Laws of the Association, or any rules and regulations adopted hereunder, shall be grounds for an action at law or equity instituted by the Developer, the Association, or any Owner against any person violating or threatening to violate any such covenant, restriction, rule, or regulation. . . . Id. at 80, 85-86, 89 (emphases added). In May 2003, Rose Heide purchased a home in Benjamin Crossing. Heide lives in the residence, and in April 2008 she began operating a licensed child care home in her residence. On weekdays, Heide cares for up to twelve children, only three of whom reside in Benjamin Crossing. The children are usually dropped off at Heides home at 7:30 a.m., and they are usually picked up by 6:00 p.m., although the child care home is occasionally open as late as 10:30 p.m. Heide has a fenced backyard containing at least one swingset. The children in Heides care play under adult supervision in Heides yard
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at the same time for approximately thirty minutes three times each day. Heide previously advertised her child care operation by placing a sign in her yard, but at the Associations request she removed the sign. Heides home is a two-story house of approximately 3600 square feet. The entire downstairs of the home is used for the child care operation (excepting the garage). Heide filed a Schedule C (Profit or Loss from Business) and Form 8829 (Expenses for Business Use of Your Home) with her federal income tax return. On her tax return she indicated that approximately one hundred percent of her annual income is from operating the child care business and that fifty percent of her home is used for the child care operation. Wilkerson purchased a home in Benjamin Crossing in February 2008. In March 2008, he and his wife began operating a licensed child care home in their residence, and the business has had at least one part-time employee. On weekdays Wilkersons wife cares for up to twelve children, none of whom reside in Benjamin Crossing. The children are usually dropped off at Wilkersons home at 8:00 a.m., and they are usually picked up between 5:00 and 6:00 p.m., although the child care operation is occasionally open as early at 6:00 a.m. and as late as 11:00 p.m. Wilkerson has a fenced backyard containing at least one swingset as well as some riding toys, balls, and bikes. The children in Wilkersons care play under adult supervision in Wilkersons yard at the same time twice each day for approximately thirty minutes, sometimes longer in the summer. Wilkersons home is a two-story house of approximately 2800 square feet. The entire downstairs of the home is used for the child care operation (excepting the garage). Wilkerson and his wife filed a Schedule C (Profit or Loss from Business) and Form 8829
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(Expenses for Business Use of Your Home) with their federal income tax return. On the tax return they indicated that approximately forty percent of their annual income is from operating the child care business and that forty-two percent of the home is used for the child care operation. On October 29, 2008, Heide and Wilkerson filed a complaint against the Homeowners Association, the Building Commission,2 and C.P. Morgan Communities, L.P., seeking damages and a declaratory judgment that the Building Commission and the Association could not enforce the restrictive covenant that prohibits the operation of a business in residences in the PUD.3 The Association filed a motion to dismiss the complaint as well as a counterclaim, seeking an injunction to prohibit Heide and Wilkerson from operating their child care homes in Benjamin Crossing. Following a hearing, the trial court granted the Associations motion to dismiss the complaint on the ground that Lewis-Levett v. Day, 87 N.E.2d 293 (Ind. Ct. App. 2007), "permits the enforcement of a restrictive covenant prohibiting the operation of businesses within a development to which the covenant applies against a licensed daycare." Appellants App. at 5.

In the complaint, Heide and Wilkerson allege that the Building Commission is responsible for enforcing the covenants in Benjamin Crossing. The trial court denied the Building Commissions motion to dismiss the complaint, but the Building Commission later dismissed its counterclaim against Heide and Wilkerson, and Heide and Wilkerson dismissed their claims against the Building Commission, without prejudice. In the complaint Heide and Wilkerson alleged that they had purchased their homes in Benjamin Crossing in reliance on statements by C.P. Morgan Communities, L.P. personnel that restrictive covenants for the PUD did not prohibit the operation of a child care home in the PUD. The claim against C.P. Morgan Communities, L.P. is not before us on appeal.
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On January 22, 2010, the Homeowners Association filed a motion for summary judgment on its counterclaim. Apparently assuming that the trial court would enter judgment for the Homeowners Association, neither Heide nor Wilkerson filed any response, designated evidence, or filed a summary judgment motion. After a hearing, the trial court reversed the reasoning behind its prior order granting the Associations motion to dismiss Heide and Wilkersons complaint, finding in relevant part that the "restrictive covenants of a planned unit development have the status of a zoning ordinance, and a zoning ordinance may not exclude the operation of a licensed child care home in the operators residence." Appellants App. at 13. The trial court then granted summary judgment for Heide and Wilkerson on the Associations counterclaim. Homeowners Association now appeals. DISCUSSION AND DECISION The Homeowners Association appeals the trial courts order denying summary judgment for the Association and granting summary judgment for Heide and Wilkerson. In an appeal from the grant or denial of summary judgment, we apply the same standard used by the trial court. See Hartman v. Keri, 883 N.E.2d 774, 777 (Ind. 2008). We review a summary judgment order de novo. Bules v. Marshall County, 920 N.E.2d 247, 250 (Ind. 2010). The purpose of summary judgment is to end litigation about which there can be no factual dispute and which may be determined as a matter of law. Shelter Ins. Co. v. Woolems, 759 N.E.2d 1151, 1153 (Ind. Ct. App. 2001), trans. denied. We must determine whether the evidence that the parties designated to the trial court presents a genuine issue of material fact and whether the moving party is entitled to a judgment as a
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matter of law. Ind. Trial Rule 56(C); Bules, 920 N.E.2d at 250. We construe all factual inferences in the nonmoving partys favor and resolve all doubts as to the existence of a material issue against the moving party. Bules, 920 N.E.2d at 250. Summary judgment is a lethal weapon and courts must be mindful of its aims and targets and beware of overkill in its use. Heeb v. Smith, 613 N.E.2d 416, 420 (Ind. Ct. App. 1993), trans. denied. Although the trial court entered findings and conclusions, they are not binding upon this court. Dorman v. Osmose, Inc., 782 N.E.2d 463, 466 (Ind. Ct. App. 2003). However, the findings facilitate our review by providing valuable insight into the court s decision. Id. If the trial courts summary judgment can be sustained on any theory or basis in the record, we must affirm. Id. The Homeowners Association contends that the trial court erred when it granted summary judgment in favor of Heide and Wilkerson on the Associations counterclaim. Specifically, the Association asserts that the trial court erred when it concluded that "restrictive covenants of a planned unit development have the status of a zoning ordinance" and that, because a zoning ordinance may not prohibit the operation of a child care home in the operators residence, neither may such a restrictive covenant be enforced where the restrictive covenant has been adopted in a PUD ordinance. See Appellants App. at 13. We agree with the Association that the planned unit development ordinance has no effect on the Associations authority to enforce the private restrictive covenants at issue.

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The creation of a planned unit development is a legislative act and PUD provisions are zoning ordinances.4 Story Bed & Breakfast, LLP v. Brown County Area Plan

Commn, 819 N.E.2d 55, 64 (Ind. 2004) (citation omitted). Restrictive covenants and zoning ordinances, including planned unit development ordinances, are tools used to restrict the use of real property. Our supreme court has described restrictive covenants as follows: "A restrictive covenant is an agreement between a grantor and a grantee in which the latter agrees to refrain from using his property in a particular manner." Johnson v. Dawson, 856 N.E.2d 769, 772 (Ind. Ct. App. 2006). Restrictive covenants have also been described as " ,,restrictions arising out of agreements between private parties who, in the exercise of their constitutional right of freedom of contract, can impose whatever lawful restrictions upon the use of their lands that they deem advantageous or desirable. " Ogden v. Premier Properties, USA, Inc., 755 N.E.2d 661, 667 (Ind. Ct. App. 2001) (quoting 5 Edward H. Ziegler, Jr., RATHKOPFS THE LAW OF ZONING AND PLANNING

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