FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEES:
MICHAEL H. MICHMERHUIZEN DAVID VAN GILDER
PATRICK G. MURPHY Van Gilder & Trzynka, PC
Barrett & McNagny LLP Fort Wayne, Indiana
Fort Wayne, Indiana
IN THE
COURT OF APPEALS OF INDIANA
WEDGEWOOD COMMUNITY )
ASSOCIATION, INC., )
)
Appellant-Plaintiff, )
)
vs. ) No. 02A03-0204-CV-112
)
ROBERT O. NASH and BARBARA NASH, )
)
Appellee-Defendants. )
APPEAL FROM THE ALLEN SUPERIOR COURT, CIVIL DIVISION
The Honorable Nancy Eshcoff Boyer, Judge
Cause No. 02D01-0003-CP-470
January 21, 2003
OPINION - FOR PUBLICATION
MATHIAS, Judge
Wedgewood Community Association, Inc. (Wedgewood Association) appeals the Allen Superior Courts determination
that despite a restrictive covenant violation by Robert O. Nash (Nash), he was
not required to remove a shed constructed in his yard. Wedgewood raises
two issues on appeal, which we restate as:
I. Whether the trial court clearly erred when it determined that Wedgewoods claim for
declaratory and injunctive relief in law and equity against Nash was defeated by
the doctrine of unclean hands; and,
II. Whether the trial court abused its discretion when it denied Wedgewoods request for
attorney fees.
We reverse.
Facts and Procedural History
The facts most favorable to the trial courts determination reveal that throughout this
proceeding, Nash resided at 7204 Bay Head Cove, Fort Wayne, Indiana. His
residence is one of 161 lots in Wedgewood Place subdivision. Wedgewood Association
is a not-for-profit Indiana corporation that governs the homeowners association of Wedgewood Place
subdivision.
The residents in Wedgewood Place are bound by the Dedications, Protective Restrictions, Covenants,
Limitations, Easements and Approvals, Appended to and Made a Part of the Dedication
and Plat of Wedgewood Place Subdivision Section I a subdivision in St. Joseph
Township, Allen County, Indiana (the Restrictive Covenants), which has been amended several times
since it was originally recorded in 1987. Appellants App. p. 46-59.
In 1997, Nash received a copy of the Restrictive Covenants as an attachment
to his Deed.
In pertinent part, the covenants provide:
ARTICLE VI
ARCHITECTURAL CONTROL
No building, fence, wall, or other structure shall be commenced, erected, or maintained
upon any lot, nor shall any exterior addition to or change or alteration
therein be made until the plans and specifications showing the nature, kind, shape,
height, materials, and location of the same shall have been submitted to and
approved in writing as to harmony of external design and location in relation
to surrounding structures and topography by the Board of Directors of the Association,
or by the Architectural Control Committee to be composed of three members, the
first Committee members to be: . . . . A majority of
the Committee may designate a representative to act for it. In the
event of death or resignation of any member of the Committee, the remaining
members shall have full authority to designate a successor. In the event
said Board, or the Architectural Control Committee, fails to approve or disapprove such
design and location within thirty (30) days after said plans and specifications have
been submitted to it, this article will be deemed to have been fully
complied with.
ARTICLE VII
GENERAL PROVISIONS
Section 1. No lot shall be used except for residential building purposes. No
building shall be erected, altered, placed or permitted to remain on any lot
other than one detached single-family dwelling not to exceed two and one-half stories
in height. Each house shall include not less than a two-car garage,
which shall be built as part of said structure and attached thereto.
. . . .
Section 7(a). No structure of a temporary character, no trailer, boat trailer, camper or
camping trailer, no basement, tent, shack, unattached garage, barn or other outbuilding, shall
be constructed, erected, located or used on any lot for any purpose, including
use as a residence, either temporarily or permanently; provided, however, that basements may
be constructed in connection with the construction and use of a residential building.
. . . .
Section 20. The Association, The North Eastern Construction Co., Inc., or any owner shall
have the right to enforce, by any proceeding at law or in equity,
all restrictions, conditions, covenants, reservations, liens and charges now or hereafter imposed by
the provisions of these covenants and restrictions. Failure by the Association or
by any owner to enforce any covenant or restriction herein contained shall in
no event be deemed a waiver of the right to do so thereafter.
. . . .
Section 26, Attorneys Fees and Related Expenses. In the event the Association or North
Eastern Construction Co., Inc., shall be successful in any proceeding, whether at law
or in equity, brought to enforce any restriction, covenant, limitation, easement, condition, reservation,
lien or charge now or hereinafter imposed by the provisions of the Dedication,
Protective Restrictions, Covenants, Limitations, Easements and Approvals Appended to and made a part
of the Dedication and Plat of Wedgewood Place, Section I, such party shall
be entitled to recover from the party against whom the proceeding was brought
all of the attorneys fees and related costs and expenses incurred in such
proceeding.
Ex. Vol. I, Ex. F.
In 1997, Wedgewood Association conducted a survey among the residents, asking each resident
whether he or she was in favor of amending the Restrictive Covenants to
allow outbuildings subject to certain construction standards. The survey provided that if
more than seventy-five percent of the residents agreed to amend the Restrictive Covenants,
the Associations attorney would begin drafting an amendment. Less than seventy-five percent
of the residents voted in favor of the proposed outbuilding amendment. Tr.
p. 28.
In February of 2000, Nash erected an eight-foot by ten-foot garden shed in
his backyard, without first submitting written plans to the Architectural Committee or receiving
written approval from the Wedgewood Board of Directors or the Architectural Control Committee,
all required steps pursuant to Article VI of the Wedgewood Place Restrictive Covenants.
Wedgewoods Board President Steve McMichael (McMichael) was immediately notified of the shed
by a resident.
Within one day of the erection of the shed, McMichael and Architectural Control
Committee Chairperson Michael Tucker (Tucker) went to the Nash residence to discuss the
shed. They knocked at the Nash residence door, but there was no
answer. Later that same day, Tucker again went to the Nash residence,
and knocked at the door. Again, there was no answer. Attorney
Robert E. Doelling, Jr. then sent Nash a letter notifying Nash that he
was in violation of a restrictive covenant. Nash contacted McMichael and arranged
a meeting for February 26, 2000, at the Nash residence.
At the meeting, McMichael and Nash reached an informal agreement whereby McMichael agreed
to delay any action against Nash for forty-five days, and Nash would send
a written response to the agreement by February 28, 2000. The response
was to provide that if Nash could not obtain support of more than
seventy-five percent of the neighborhood residents in favor of amending the Restrictive Covenants
to allow such structures, then Nash would remove his shed by May 1,
2000. Nash failed to send any such written correspondence to McMichael.
Additionally, while the Nash family began the survey, they did not complete it,
and the final results were never tallied and distributed. Thereafter, Nash did
not remove the shed from his yard, and never reached any subsequent agreement
with Wedgewood Association.
On March 31, 2000, Wedgewood Association filed a complaint against Nash for violating
the Restrictive Covenants. Wedgewood Association requested declaratory and injunctive relief in law
and equity for breach of the Restrictive Covenants including but not limited to
an Order requiring [Nash] to remove from the Premises said Shed and for
judgment against [Nash], . . . , for court costs, attorney fees, and
for all other relief as is just and proper in the premises.
Appellees App. p. 3. After briefing was complete, the trial court conducted
a bench trial on January 23, 2002, and February 1, 2002. Pursuant
to court order, the parties submitted Proposed Findings of Fact and Conclusions of
Law on February 15, 2002. On March 26, 2002, the trial court
entered its Order of Judgment, including Findings of Fact and Conclusions of Law.
With regard to the doctrine of unclean hands, the trial court made the
following pertinent findings and conclusions:
FINDINGS OF FACT
. . . .
17. Prior to this litigation, and extending through the date of trial, current Wedgewood
board member Dave Koenig (Koenig) has had located on his property in the
backyard an unattached structure used in conjunction with an outdoor childs play set.
18. According to Koenig, the structure has sides, a door and a shingled roof.
The structure, although located on stilts, is not attached to his residence
and is a building. This playhouse is located at 6426 Postbrook Lane
and is located within Wedgewood.
19. An unattached childs play structure with a roof and sides is also located
at 7217 Woodmeadows Lane, which home is located within the boundaries of Wedgewood.
20. In Koenigs opinion, the structure located on his property does not violate the
restrictive covenants because it is a childs play structure, and has the sole
purpose for childrens playing. However, upon questioning by the Court, Koenig agrees
that if the same structure were removed from its stilts, placed on the
ground and used to store garden tools, the structure could be in violation
of the restrictive covenants.
21. Nashs remaining allegations of other covenant violations deal with trailers, boats, campers, satellite
dishes, aerials and trucks.
. . . .
CONCLUSIONS
Any finding of fact shall also be deemed a conclusion.
. . . .
There are, however, personal defenses available to Nash to an action in equity
seeking to enforce restrictive covenants. These are estopple [sic], acquiescence and clean
hands.
. . . .
The structures located at 6426 Postbrook Lane and 7217 Woodmeadows Lane are unattached
outbuildings. Wedgewood attempted to distinguish these structures on the basis that they
had three sides, that they were childrens play structures, or that they were
not enclosed[.] Nothing in the Restrictive Covenants defines an outbuilding as being
a structure that is fully enclosed. Neither do the covenants differentiate and
permit outbuildings on their use, that is storage versus childs play.
Websters Collegiate Dictionary, 10th Edition defines structure as something that is constructed,[ ]
a building as a roofed and walled structure[,][ ] an outbuilding as a
building separate from, but accessory to a main house[,][ ] and a shack
as an enclosed structure for a particular use.
Any of these definitions fit both the Nashs [sic] shed and the childrens
play houses currently located in Wedgewood.
Both, then, are in violation of the Restrictive Covenants of Wedgewood. The
structure located at 6426 Postbrook Lane is located on board member Koenigs property.
This violation existed both prior to, and at the time of the
trial of this matter.
The doctrine of unclean hands is an equitable tenet[,] which demands one who
seeks equitable relief to be free from wrongdoing in the matter before the
Court. Stewart v. Jackson, 635 N.E.2d 186, 189 (Ind. Ct. App. 1994).
Although Indiana recognizes the ability to purge oneself of wrongdoing, which effectively
restores the right to equitable relief, Wedgewood had not purged itself of the
wrongdoing as of [the] date of trial. Id. at 190.
As a result, Wedgewoods claim is defeated on the basis of unclean hands.
Wedgewood is precluded from seeking equitable relief because of its own violation of
Article VI Section 7(a), specifically, the outbuildings located at 6426 Postbrook Lane and
7217 Woodmeadows Lane.
. . . .
ORDER
. . . .
As to the Complaint originally filed by Wedgewood Community Association, Inc. against Barbara
Nash, the Court dismisses Barbara Nash from that claim.
As to Robert O. Nash, the Court DENIES Wedgewood Community Association, Inc.s Petition
for Injunctive Relief.
Appellants App. pp. 13-24. With regard to attorney fees, the following findings
and conclusions are applicable:
FINDINGS OF FACT
. . . .
44. Wedgewood has incurred $28,616.74 in attorneys fees and expenses in the prosecution of
its claim against Robert and Barbara Nash. . . .
. . . .
CONCLUSIONS
. . . .
Any finding of fact shall also be deemed a conclusion.
. . . .
ORDER
. . . .
Both parties[] requests for attorneys fees are DENIED.
. . . .
Appellants App. pp. 13-24. Wedgewood Association now appeals. Additional facts will
be provided as necessary.
Standard of Review
Wedgewood Associations suit requested declaratory and injunctive relief in law and equity.
The trial court entered specific findings of facts and conclusions of law.
Pursuant to Indiana Trial Rule 52, our court will not set aside a
trial courts findings or judgment unless clearly erroneous. Additionally, we must pay
heed to the trial courts ability to judge the credibility of the witnesses.
We utilize a two-tier standard of review in this situation. Crawley
v. Oak Bend Estates Homeowners Assoc., 753 N.E.2d 740, 744 (Ind. Ct. App.
2001), trans. denied.
First, we consider whether the evidence supports the findings, construing the findings liberally
in support of the judgment. Findings are clearly erroneous only when a
review of the record leaves us firmly convinced that a mistake has been
made. Next, we determine whether the findings support the judgment. A
judgment is clearly erroneous when the findings of fact and conclusions thereon do
not support it. In applying this standard, we neither reweigh the evidence
nor judge the credibility of the witnesses. Rather, we consider the evidence
that supports the judgment and the reasonable inferences to be drawn therefrom.
Id. (quoting Ballard v. Harman, 737 N.E.2d 411, 415-16 (Ind. Ct. App. 2000)
(citation omitted)).
I. Unclean Hands
Wedgewood Association argues that the trial court was clearly erroneous when it determined
that even though Nash was in clear violation of the restrictive covenant prohibiting
outbuildings, Wedgewood Association was not entitled to relief based upon their own unclean
hands. The principle of unclean hands is that he who comes into
equity must come with clean hands. Keller v. Ind. Dept. of State
Revenue, 530 N.E.2d 787, 788 (Ind. Tax Ct. 1988), appeal dismissed, 549 N.E.2d
372 (Ind. 1990) (citing Precision Instrument Mfg. Co. v. Auto. Maint. Mach. Co.,
324 U.S. 806 (1945); Roberts v. Vonnegut, 58 Ind. App. 142, 104 N.E.2d
231 (1914)). The doctrine of unclean hands is not favored and must
be applied with reluctance and scrutiny. Shriner v. Sheehan, 773 N.E.2d 833,
847-48 (Ind. Ct. App. 2002) (citation omitted). For the doctrine of unclean
hands to apply, the misconduct must be intentional, id. (citation omitted), and the
wrong that is ordinarily invoked to defeat a claimant by using the unclean
hands doctrine must have an immediate and necessary relation to the matter before
the court. Keller, 530 N.E.2d at 788 (quoting Keystone Driller Co. v.
Gen. Excavator Co., 290 U.S. 240 (1933); Powell v. Mobile Cab & Baggage
Co., 263 Ala. 476, 83 So. 2d 191 (1955)).
See footnote
Nash argues that Wedgewood Association had unclean hands because one of its Board
members, Koenig, was also violating the restrictive covenant prohibiting outbuildings and shacks that
Nash himself was violating. Nash argues that [i]t is clearly inequitable for
Wedgewood to bring a suit based on Nashs alleged violation of a restrictive
covenant when Wedgewoods board member is in violation. Br. of Appellee at
10.See footnote Nash also complains that Wedgewood Association has not actively sought out
covenant violations.
Nash relies heavily on
Stewart v. Jackson, 635 N.E.2d 186 (Ind. Ct. App.
1994). Stewart involved next-door neighbors, wherein one was trying to enforce a
restrictive covenant against the other. The Jacksons were operating a home daycare
out of their residence, contrary to the restrictive covenants governing the neighborhood.
The Stewarts brought the suit requesting injunctive relief prohibiting the Jacksons from operating
the daycare. At trial, the Jacksons presented evidence that several other people
in the neighborhood were violating the restrictive covenants. They presented evidence of
instances where neighbors worked from their homes: four other daycare homes, a salesman
that worked from his home, a woman who taught piano lessons in her
home, a woman that sold crafts from her home, and a man who
ran a computer consulting business from his home. Id. at 188.
The Jacksons also presented evidence that the Stewarts themselves had operated as a
toy manufacturer and wholesaler from their home, and that Mr. Stewart operated his
contracting construction company from his home. Id.
A panel of this court concluded that the unclean hands doctrine was one
of the theories used by the trial court when it denied the Stewarts
request for injunctive relief. Id. at 189. Our court concluded that
Indiana recognizes the ability of a party to purge itself of wrongdoing, which
restores that partys right to seek equitable relief. Id. at 189 (citing
Keller, 530 N.E.2d at 790). Our court then concluded that because the
Stewarts were no longer operating businesses from their home, they had purged themselves
of unclean hands, and therefore, their claim against the Jacksons could not be
defeated based upon the unclean hands doctrine. Id. Additionally, in a
footnote, this court found that even though there was evidence that the Stewarts
were in violation of other restrictive covenants for fence heights and commercial vehicle
parking, such violations did not support an unclean hands finding because the violations
were merely incidental to the issues in the case. Id. at 190
n.1 (citing Keller, 530 N.E.2d at 788).
We conclude that the Stewart case is dissimilar to ours. One very
important difference between Stewart and our case is that in our case, the
plaintiff is Wedgewood Association, not an actual resident of the neighborhood. It
was very important to the Stewart case decision, and the application and applicability
of the unclean hands doctrine, that one neighbor was complaining of another neighbors
covenant violation while at the same time, the complaining neighbor also might have
been violating the same covenant.
In our case, however, Wedgewood Association is not and cannot possibly be violating
the same restrictive covenant as Nash because Wedgewood Association is not a resident
of the neighborhood. Additionally, although Nash complains of the actions of one
of the board members, such conduct does not convert Wedgewood Association into a
fellow resident. Alleged selective enforcement of restrictive covenants is clearly not a
violation of the restrictive covenant forbidding outbuildings and may be remedied by the
ballot box of the association officer elections. Therefore, the unclean hands doctrine
is not applicable to this case, and the trial courts decision was clearly
erroneous. Based upon the trial courts conclusion that Nashs outbuilding was in
violation of the restrictive covenant prohibiting such outbuildings, and our conclusion that the
doctrine of unclean hands (the only basis for the trial courts decision) is
not applicable to the facts of this case, we conclude that Wedgewood Associations
injunction should have been granted.
See footnote
II. Attorney Fees
Wedgewood Association next argues that the trial court abused its discretion when it
failed to award it attorney fees and related costs and expenses pursuant to
Article VII, Section 26 of the Restrictive Covenants.
See footnote Amended Article VII, Section
26 of the Restrictive Covenants provides:
Section 26, Attorneys Fees and Related Expenses. In the event the Association or North
Eastern Construction Co., Inc., shall be successful in any proceeding, whether at law
or in equity, brought to enforce any restriction, covenant, limitation, easement, condition, reservation,
lien or charge now or hereinafter imposed by the provisions of the Dedication,
Protective Restrictions, Covenants, Limitations, Easements and Approvals Appended to and made a part
of the Dedication and Plat of Wedgewood Place, Section I, such party shall
be entitled to recover from the party against whom the proceeding was brought
all of the attorneys fees and related costs and expenses incurred in such
proceeding.
Appellants App. p. 56. Based upon this Restrictive Covenant and the fact
that we conclude in Part I of this opinion that Wedgewood Association may
enforce its restrictive covenant prohibiting outbuildings against Nash, we conclude that Wedgewood Association
is entitled to trial court attorney fees and related costs and expenses.
Nash argues that regardless of the validity of the covenants, the trial court
never determined that Nash was violating the restrictive covenants. We disagree.
After defining the words structure, building, outbuilding and shack, the trial court provided:
Any of these definitions fit both the Nashs [sic] shed and the
childrens play houses currently located in Wedgewood. Appellants App. p. 11 (emphasis
added). In the next paragraph of conclusions, the trial court found:
Both, then are in violation of the Restrictive Covenants of Wedgewood. The
structure located at 6426 Postbrook Lane is located on board member Koenigs property.
The violation existed both prior to, and at the time of the
trial of this matter. Id. (emphasis added). The trial courts use of
the word both in the first cited paragraph refers to Nashs shed and
the childrens playhouses referred to throughout the case. The use of the
word both in the second cited paragraph again refers to Nashs shed and
the childrens playhouses. The trial court clearly determined that Nash was in
violation of the restrictive covenant prohibiting outbuildings.
The trial court found that Wedgewood incurred $28,616.74 in attorneys fees and expenses
in the prosecution of its claim against Nash. Appellants App. p. 21.
Therefore, as stated above, we conclude that pursuant to Amended Article VII,
Section 26, Wedgewood is entitled to attorney fees and related costs and expenses
from Nash.
Conclusion
Because the trial court based its decision upon the erroneous application of the
unclean hands doctrine to the facts of this case, we reverse the trial
courts determination that regardless of Nashs restrictive covenant violation, his shed could remain
on his property, and conclude that Nash must remove his shed. We
further conclude that based upon Amended Article VII, Section 26 of the Restrictive
Covenants, and our decision that the unclean hands doctrine does not apply to
this case, Wedgewood is entitled to recover its attorney fees and related costs
and expenses.
Reversed.
BAILEY, J., concurs.
SULLIVAN, J., concurs with separate opinion.
IN THE
COURT OF APPEALS OF INDIANA
WEDGEWOOD COMMUNITY )
ASSOCIATION, INC., )
)
Appellant-Plaintiff, )
)
vs. ) No. 02A03-0204-CV-112
)
ROBERT O. NASH and BARBARA NASH, )
)
Appellees-Defendants. )
SULLIVAN, Judge, concurring
The result which we reach today does not seem quite equitable or fair.
It does, however, comport with the law as it currently exists.
The conduct of Wedgewood, through McMichael and others, is not conduct which is
prohibited by the Indiana doctrine of unclean hands. Unclean hands was the
basis upon which the trial court made its determination. That doctrine does
not equate with acquiescence or even a concept of fair dealing between a
homeowners association (made up of the collective residents as governed by a Board
of Directors) and a particular resident.
Furthermore, although to assess Nash with attorney fees of $28,000 may seem disproportionate
to the gravity of the matter in litigation, the controlling documents permit such
award.
Accordingly, I concur albeit somewhat reluctantly.
Footnote:
The maxim in question is said not to affect all sinners or
to embrace general iniquitous conduct, and not to comprehend all moral infirmities, the
reason being that courts of equity are not primarily engaged in the moral
reformation of the individual citizen.
Keller, 530 N.E.2d at 789 (quoting 27
Am. Jur. 2d Equity § 138 (1974)).
Footnote:
Even though the structure at issue in this case is a shed
on Nashs property, and the only parties to the case are Wedgewood Association
and Nash, the trial court concluded that Koenig and the other property owner
with a childs playhouse were violating the restrictive covenant prohibiting outbuildings. Appellants
App. p. 23.
Footnote: Because the unclean hands doctrine is not applicable to this case, we
need not address whether Wedgewood Associations conduct was intentional and directly related to
their enforcement of the covenant against Nash.
Footnote:
Because we conclude that the trial court was clearly erroneous when it
determined that unclean hands prevented Wedgewood Association from enforcing the restrictive covenant prohibiting
outbuildings against Nash, Wedgewoods argument that it should have been awarded attorney fees
despite that determination is moot.