Virginia F. Kleist and Daniel Stern owned own lakefront properties within the Chautauqua Shores subdivision. All property owners were subject to covenants and restrictions that were filed in 1962, when the subdivision was developed. The covenants and restrictions give “each and every owner of land in [the subdivision] . . . the right to enforce the same by appropriate court proceedings.”

In December 2014, Stern purchased his property with plans to demolish the existing house and build a much larger house. When Kleist saw the site plans for the new house, she notified Stern by letter in early August 2015 that the site plan showed that the home he was about to construct was in violation of paragraph five of the covenants and restrictions, which required a 100-foot setback from the lake line for any building. That same month, Kleist filed suit to enjoin Stern from violating that covenant and restriction and to require him to remove any buildings that were in violation. By her amended complaint, Kleist alleged that the house would also violate the second and fourth paragraphs of the covenants and restrictions.

Stern, believing that he was in compliance with the covenants and restrictions, proceeded with the construction and the house was fully built. A nonjury trial was held and, at the close of Kleist's proof, supreme court granted Stern's motion for a directed verdict and dismissed the amended complaint.

Upon Stern's motion for a directed verdict, the court was required to accept Kleist's evidence as true and afford her every favorable inference that might reasonably be drawn from the facts as presented– and grant the motion only if there was no rational process by which the court could have found in Kleist's favor.

The appeals court concluded that the trial court erred in granting the motion with respect to the claims in the amended complaint alleging violations of paragraphs four and five of the covenants and restrictions. The court modified the order by denying the motion in part and reinstating the amended complaint to the extent it alleged violations of those covenants and restrictions and  granted a new trial on those claims before a different justice.

The law has long favored free and unencumbered use of real property, and covenants restricting use are strictly construed against those seeking to enforce them. And a party seeking to enforce a restriction on land use must prove, by clear and convincing evidence, the scope, as well as the existence, of the restriction—because restrictive covenants will be enforced only when the intention of the parties is clear and the limitation is reasonable.

The appeals court disagreed with Kleist that she established by clear and convincing evidence that Stern's house violated the second paragraph of the covenants and restrictions, which provided that only single family dwellings “not more than one and one-half stories in height . . . shall be placed on any lot.” That same covenant was addressed in a 2004 case in which the appeals court determined that supreme court incorrectly accepted the interpretation of the covenant “as prohibiting property owners from building homes of more than 1½ stories in design, regardless of their height.” The appeals court concluded that “[t]he words not more than one and one-half stories in height "are ambiguous in scope,” and because the defendants, who were seeking to enforce the covenant, “failed to present . . . clear and convincing proof with respect to what number of feet constitutes a story in height,’ the scope of the covenant [was] uncertain, doubtful, or debatable,’ thus rendering it unenforceable as applied to plaintiff’s residence.”

In this case Kleist also failed to show by clear and convincing evidence the scope and meaning of the covenant in the second paragraph. Kleist's experts testified to three different interpretations of that covenant. One expert, who was familiar with restrictive covenants written for subdivisions in the area, opined that, for the most part, height restrictions are usually delineated in feet, and the relevant covenant was not so delineated. Instead, it was delineated in terms of “stories,” and there was no clear and convincing proof of what that meant.

The appeals court agreed with Kleist that she established by clear and convincing evidence that Stern's house violated the fourth and fifth paragraphs of the covenants and restrictions. The fourth paragraph provides that “[n]o building shall be constructed on any lot so that any part thereof shall be closer than . . . ten (10) feet from the side . . . lot line.” Kleist's expert testified that the building plans showed that the right side of the house was 8 feet 1 inch from the side, and the left side encroached on the setback by about a foot. The fifth paragraph provides that “[n]o building shall be constructed . . . closer than 100 feet from the lake line.” Kleist's experts testified that the house had a covered porch within the setback and opined that it was part of the building and thus violated the setback.

Stern's reliance on the fact that there were other properties within the subdivision with attached decks located in the setbacks was misplaced because enforcement of the setback was different than whether there was a violation of the setback.

Although the supreme court determined that there was a violation of at least one of the covenants and restrictions, it granted the motion on the ground that Kleist could not seek equitable relief because she did not seek such relief against other property owners within the subdivision regarding their alleged violations of the same covenants and restrictions. That was error because Kleist was entitled to ignore inoffensive violations of the restrictions without forfeiting her right to restrain others which she found offensive.

Moreover, supreme court's reluctance to grant equitable relief where the house was already been built was not a valid basis for granting Stern's motion—because he proceeded with construction of the house with knowledge of the restrictive covenants and of Kleist's intention to enforce them.

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