River Heights Associates Ltd. Partnership v. Batten

Present: Hassell, C.J., Keenan, Kinser, Lemons, and Agee, JJ.,
and Carrico and Compton, S.JJ.

RIVER HEIGHTS ASSOCIATES
LIMITED PARTNERSHIP, ET AL.
                                              OPINION BY
v.   Record No. 030180             SENIOR JUSTICE HARRY L. CARRICO
                                           January 16, 2004
ALICE BATTEN, ET AL.

           FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY
                  Paul M. Peatross, Jr., Judge

                         Procedural Background

      In a bill of complaint for declaratory judgment, Alice

Batten and other owners of lots in the Carrsbrook Subdivision

in Albemarle County (collectively, Batten) 1 sought a

declaration favoring the enforceability of restrictive

covenants prohibiting commercial use of four unimproved lots

in the same subdivision, namely, Lots 1, 2C, and 2D in Section

C and Lot 1 in Section E.     River Heights Associates Limited

Partnership is the record owner of Lot 1, Section C, which it

acquired in 1998, S.V. Associates is the record owner of Lots

2C and 2D, Section C, which it acquired in 1978, and First

Gold Leaf Land Trust is the record owner of Lot 1, Section E,

which it acquired in 1986.     Batten named these record owners

as the defendants in her bill of complaint.




      1
       The other lot owners are James W. Craig, Anthony A.
Hastoglis, Elizabeth S. Hastoglis, Joseph T. Mason, Nancy P.
Mason, Thomas A. McQueeney, Catherine C. Teague, Joseph W.
Teague, Jr., Edith L. B. Turner, Robert E. Whitworth, John W.
Wolcott, III, and Karen Wolcott.
     Although the entities just listed hold title to the four

lots in question, the briefs describe Wendell W. Wood and his

wife, Marlene C. Wood, as the beneficial owners of the lots.

While the Woods were not named as defendants below and are not

parties to this appeal, the appellants in the case are

referred to collectively in the briefs as "Wood," and we will

follow the same practice.

     Wood demurred to the bill of complaint on the grounds,

inter alia, that Batten had failed to state a cause of action

upon which relief could be granted and had failed to allege

the existence of a controversy pursuant to Code § 8.01-184, a

part of the declaratory judgment statutes, so as to confer

jurisdiction over the claims asserted in the bill of

complaint.   The trial court overruled the demurrer on these

grounds but sustained it on other grounds not pertinent here

and allowed Batten to file an amended bill of complaint.

     Batten filed an amended bill not differing in substance

from her original bill.   Wood filed an answer to the amended

bill in which he denied the essential elements of Batten's

claim for relief.   In a section styled "Affirmative Defenses,"

Wood contended that Batten had failed to state a cause of

action upon which relief could be granted, that the

restrictive covenant was unenforceable, and that the covenant




                                2
did not apply to his property.   Wood also contended that he

had no knowledge of the covenant.

                    Evidentiary Background

     Carrsbrook Subdivision is located on the eastern side of

U.S. Route 29 between the northern city limits of

Charlottesville and the Rivanna River.   The four lots here in

dispute are located at the western edge of the subdivision and

are the only lots with frontage on U.S. Route 29.

     The restrictive covenants were established in a deed

dated May 6, 1959, from Norman Kelsey and wife to Charles W.

Hurt (the Kelsey-Hurt deed), which conveyed an unsubdivided

40-acre portion of "the land known as 'Carrsbrook.' "    The

conveyance was made subject to "certain restrictions . . .

which shall be considered as covenants running with the land."

Only one of the restrictions is pertinent here:    "The property

is to be used for residential purposes only and no rooming

house, boarding house, tourist home, or any other type of

commercial enterprise, or any church, hospital, asylum, or

charitable institution shall be operated thereon" (the

restrictive covenant).

     In October 1960, Section C of Carrsbrook was subdivided

into 19 lots, all made "subject to the restrictive covenants

applicable to Carrsbrook Subdivision of record."    An attached

plat shows Lot 1 as containing 3.04 acres bordering Carrsbrook


                                 3
Drive, Indian Spring Road, and Route 29.     Lot 2 is shown as

containing 2.55 acres bordering Indian Spring Road and Route

29.   A notation on the plat states that "[l]ots 1 & 2

restricted to non access on Rte. 29 if lots are used for

residential purposes"     (the plat note).

      In 1962, Lot 2, Section C, was resubdivided into four

lots, namely, 2A, 2B, 2C, and 2D.     Lots 2C and 2D border Route

29.   Lots 2A and 2B border only Indian Spring Road, leaving

Lots 2C and 2D without direct access to the residential roads

in the subdivision and Lots 2A and 2B without direct access to

Route 29.     In addition, Lots 2C and 2D, along with Lot 1C, are

subject to the plat note.

      In 1969, Albemarle County adopted its first comprehensive

zoning ordinance.     The lots in question were zoned to a depth

of 200 feet from Route 29 in a B-1 classification, a

commercial district in which residential use is prohibited. 2

This zoning classification was continued in a comprehensive

rezoning in 1980, with the result that presently the lots in

question are zoned for commercial use but are subject to the

restrictive covenant prohibiting such use.

      When Carrsbrook Subdivision was created in 1969, Route 29

was a two-lane road with residences and small businesses

located on each side of the road.     In the area where the lots

      2
          The southern portion of Lot 1C remains residentially
zoned.
                                  4
in question are located, Route 29 is today an eight- to ten-

lane road that is highly developed commercially on both sides

with shopping centers, hotels, restaurants, automobile

dealerships, and other types of businesses.      No residential

uses have been implemented along Route 29 since 1959.     There

have been no changes within the Carrsbrook Subdivision other

than the aging of homes and the maturing of trees.

                    The Trial Court's Decision

     At the conclusion of an ore tenus hearing, the trial

court held that the restrictive covenant against commercial

use did apply to the four lots in question and that the

covenant was enforceable.   The court entered a final decree

declaring the covenant enforceable and enjoining the use or

operation of the lots in violation of the covenant, including

developing the lots commercially in the future.     We awarded

Wood this appeal.

               Entitlement to Declaratory Relief

     Wood has assigned three errors.   One of the assignments

alleges that the trial court "erred as a matter of law in

overruling Wood's Demurrer, Motion to Strike, and his renewal

of the Motion to Strike [at] the conclusion of all the

evidence on the basis that the declaratory judgment suit was




                                5
improper under the declaratory judgment statutes [in] the Code

of Virginia." 3

                           Wood's Demurrer

     In support of his demurrer, Wood cites City of Fairfax v.

Shanklin, 205 Va. 227, 135 S.E.2d 773 (1964), a case where we

dismissed a motion for declaratory judgment.    Quoting

Shanklin, Wood says the test for determining the efficacy of a

declaratory judgment proceeding is whether "[t]he controversy

[is] one that is justiciable, that is, where specific adverse

claims, based upon present rather than future or speculative

facts, are ripe for judicial adjustment."    Id. at 229, 135

S.E.2d at 775.    And, Wood adds, Shanklin teaches that courts

are not vested with authority "to render advisory opinions, to

decide moot questions or to answer inquiries which are merely

speculative."     Id. at 229-30, 135 S.E.2d at 776.   Wood argues

that the allegations of Batten's bill of complaint did not

meet this test and that this case should never have proceeded

past the demurrer stage.

     Wood correctly states the rules enunciated in Shanklin.

But the case is inapposite; its facts differ substantially

from those in the case at bar.    In Shanklin, a taxpayer sought

to have declared invalid provisions of the city zoning

ordinance that conferred on the Board of Zoning Appeals

     3
       Code §§ 8.01-184 to -191 comprise the Declaratory
Judgment Act.
                               6
authority to issue special permits for the construction of

apartments.    We held that no justiciable controversy existed

because no specific case regarding apartment usage within the

city was involved and because the Board might never again be

called upon to act on an application for a special permit for

apartments.    Therefore, we said, too much was left to

speculation.   Id. at 231, 135 S.E.2d at 776.    Here, a specific

case is involved, and it places in controversy the use of land

for commercial purposes.

     Wood also argues that the bill of complaint failed to

allege an imminent threat of development necessary to maintain

a suit for declaratory judgment.     Wood acknowledges that

"[t]his Court has not held that a party (such as Wood) must

establish a vested right or obtain the benefit of some

significant governmental act before other affected landowners

can utilize the declaratory judgment process to determine the

rights of the parties."    Yet, Wood submits, "something more

than mere speculation — which is all that exists here — is

required [to] invoke the power of the Courts."    Then, citing

Hoffman Family, L.L.C. v. Mill Two Associates P'ship, 259 Va.

685, 529 S.E.2d 318 (2000), Wood says the "something more"

consists of " 'substantial steps,' such as the expenditure of

significant monies or the development of specific plans, to




                                 7
create a justiciable controversy under the Declaratory

Judgment Act."

      We did point out in Hoffman that the developer there had

"taken substantial steps, with significant financial expense,

in developing specific plans for the development" involved in

that case.   Id. at 693-94, 529 S.E.2d at 323.   But we did not

establish the requirement that such "significant financial

expense, in developing specific plans for . . . development,"

must be alleged and proven in every case where declaratory

judgment relief is requested.   Rather, the case merely

represents one example of where proof and allegation are

sufficient to take a prospective development out of the realm

of speculation.   The important precedential value of the case

is found in its holding that a developer need not have

governmental approval to proceed with a project before a party

adversely affected may seek relief via declaratory judgment.

Id.

      The present case is akin to Cupp v. Board of Supervisors

of Fairfax County, 227 Va. 580, 318 S.E.2d 407 (1984).     There,

Cupp and his wife, owners of a nursery, applied for a special

exception to permit modification of the layout of their

nursery.   The Planning Commission recommended that the

application be approved on the condition that the Cupps

construct a right turn lane for entrance to the nursery and


                                8
dedicate a right-of-way up to 100 feet from the centerline of

the highway.   The Cupps objected to the requirement for

construction and dedication.   The Board denied the

application, and the Cupps filed a motion for declaratory

judgment challenging the requirement.   227 Va. at 584-88, 318

S.E.2d at 408-10.

     The Board contended there was no controversy between the

parties sufficient for the Cupps to maintain a claim for

declaratory judgment.   The trial court held the Cupps could

maintain their suit and we affirmed, holding that although the

Board had not yet imposed the restrictions and conditions, "it

claimed it had the power to do so and this claim of power

threatened the Cupps [and thus] a controversy, within the

contemplation of the Declaratory Judgment Act, existed." Id.

at 593, 318 S.E.2d at 414.

     Here, Batten's bill of complaint alleged Wendell Wood had

met with members of the Carrsbrook Subdivision and "indicated

that he intended to commercially develop the properties at

issue [and] he spoke of developing a commercial three (3)

story office building with related parking facilities."

Further, the amended bill alleged that Richard E. Carter, an

attorney, had written Wendell Wood a letter stating that the

"properties [in question] were bound by restrictive covenants




                                9
and could not be used commercially." 4   In response, Wendell

Wood told the attorney "that he did not believe the

restrictions applied to his property and that it was his

express intention to develop any of the properties he owned on

Route 29 as commercial property and that he wanted to make

sure that there was no mistake as to his intentions."

     The bill also alleged that Donald A. Swofford, a local

architect, had stated in a letter to one of the complainants

that Wendell Wood had asked Swofford "to provide him with a

proposal to do a planned development for the sites [in

question, using a style called 'Albemarle-Georgian'],

including an entry to the Carrsbrook neighborhood."    Swofford

also stated that he was providing Wendell Wood "with that

proposal now to the end that we would have drawings and

sketches for the neighborhood to review in approximately two

months." 5

     In overruling Wood's demurrer, the trial court stated

that Batten had "pled sufficient facts establishing an actual

case or controversy under the Declaratory Judgment Act."    We

agree with the trial court.   Just as in Cupp, Wood's assertion

     4
       When Carter testified later in the ore tenus hearing, he
said that he had been contacted by a resident of Carrsbrook
Subdivision to render an opinion on whether "two lots in
Carrsbrook could be used for commercial purposes."
     5
       In his testimony at trial, Swofford waffled somewhat
about his arrangement with Wood. However, on demurrer, we
take as true the facts alleged in Batten's bill of complaint
for declaratory judgment.
                               10
here that he had the power to develop the lots in question for

commercial use and that he would exercise that power

threatened Batten.   And the imminence of the threat was

supplied by the statement in Swofford's letter about having

"drawings and sketches for the neighborhood to review in

approximately two months."   Thus, a controversy within the

contemplation of the Declaratory Judgment Act was sufficiently

alleged in Batten's bill of complaint, and the trial court did

not err in overruling Wood's demurrer.

               Proof of Justiciable Controversy

     This brings us to the denial of Wood's motions to strike

Batten's evidence at the ore tenus hearing.   Wood argues that

the motions should have been granted because Batten did not

prove the allegations of her bill of complaint and thus failed

to establish a justiciable controversy under the declaratory

judgment statutes.   Wood says it was unrebutted at trial that

he "did not have plans prepared at his request to immediately

develop the property"; he "never stated that he would proceed

with development without the Complainants' consent"; he "did

not ask a local architect to provide him with a proposal to do

a planned development"; he "never hired a planner"; he had no

"plans underway to prepare drawings in approximately two

months;" and he "never incurred significant financial expense




                               11
— or any expense whatsoever — with respect to the development

of these properties."

     If this analysis of the record were accurate, we might be

inclined to agree with Wood that Batten failed to prove a

justiciable controversy entitling her to declaratory judgment

relief.    But the analysis is not accurate.   It completely

disregards the most significant evidence in the case on the

issue of Batten's entitlement to declaratory judgment relief —

the evidence of Wood's meeting with the property owners in

Carrsbrook Subdivision.

     Wood requested this meeting.    He says he wanted the

meeting to avoid a lawsuit and he proposed a compromise under

which he would spend up to $50,000.00 to build an entranceway

into Carrsbrook Subdivision provided the Carrsbrook lot owners

consented to his plan to develop the property in question with

an office complex.   In these circumstances, it is clear that

an actual controversy existed over whether Wood could develop

the property in question for commercial purposes.    Indeed,

Wood's offer to pay $50,000.00 to make peace with the

Carrsbrook lot owners is proof that an actual controversy

existed.   Furthermore, Wood's offer to pay the $50,000.00,

made in light of his statement that "he wanted to make sure

there was no mistake as to his intentions" to develop the

property with or without the consent of the Carrsbrook lot


                                12
owners, bespeaks immediacy; in other words, consent now or

suffer the consequences.   Hence, there was a justiciable

controversy, one "ripe for judicial adjustment," Shanklin, 205

Va. at 229, 135 S.E.2d at 775, and the trial court did not err

in denying Wood's motions to strike Batten's evidence.

       The Restrictive Covenant Vis-a-Vis The Plat Note

     In another assignment of error, Wood alleges that "[t]he

Trial Court erred in failing to resolve the conflict between

the restrictive covenants on Lots 2C and 2D, and preventing

the commercial use of these two lots as zoned."   It will be

recalled that the restrictive covenant prohibits commercial

use of the three lots and the plat note prohibits access from

the lots to Route 29 if they are used for residential

purposes.

     Wood says there is a fundamental inconsistency between

the restrictive covenant and the plat note in this case — the

restrictive covenant prohibits commercial use of the three

lots and the plat note denies access to the lots fronting

Route 29 when used for residential purposes, leaving Lots 2C

and 2D without any useable access.   This creates a patent

ambiguity, Wood maintains, and since restrictive covenants

must be strictly construed, Waynesboro Village, L.L.C. v. BMC

Properties, 255 Va. 75, 80, 496 S.E.2d 64, 67-68 (1998), the

doubt must be resolved against the covenant and in favor of


                               13
the free use of the property.    Wood concludes that when the

doubt here is resolved in favor of the free use of the lots in

question, it is clear that "[b]y restricting access to Route

29 to only non-residential uses, the [plat note] specifically

contemplated use of the parcels for commercial uses."

     We disagree with Wood.     No ambiguity exists between the

restrictive covenant and the plat note.    The restrictive

covenant deals only with the use that may be made of the

property, without any reference to access.    The plat note

deals only with access to the property, without any reference

to use, and it cannot be construed, therefore, as a basis for

saying that the note restriction "specifically contemplated

use of the parcels for commercial uses."

     A further reason exists for saying that the plat note did

not "specifically contemplate[] use of the parcels for

commercial uses."   The plat and the instrument to which it was

attached created the Subdivision of Section C "Carrsbrook,"

including Lot 2, the parcel from which Lots 2C and 2D later

evolved.   The instrument provided that the numbered lots shown

on the plat "are subject to the restrictive covenants

applicable to the Carrsbrook Subdivision of record in the

Clerk's Office of the Circuit Court of Albemarle County,

Virginia, in Deed Book 348 page 235."    The covenants recorded

in that deed book include the very covenant that prohibits


                                 14
commercial use of lots in Carrsbrook Subdivision, without

excepting Lots 2C and 2D.   So, when the plat note and the

restrictive covenant are read together, as they must be read,

it is certain that the plat note could not possibly have

contemplated commercial use of the parcels.

     Wood complains that the result of the trial court's

decision "is to allow Wood no use of these lots for anything

other than open space," resulting in a serious dimunition in

the value of the lots.    However, Booker v. Old Dominion Land

Co., 188 Va. 143, 152, 49 S.E.2d 314, 319 (1948), is authority

for the proposition that the effect on the value of property

resulting from the enforcement or a refusal to enforce a

restrictive covenant " 'is of slight if any consequence' "

(quoting Allen v. Massachusetts Bonding & Ins. Co., 143 N.E.

499, 502 (Mass. 1924)).   Furthermore, Wood had at least

constructive notice from the record chain of title of both the

restrictive covenant that prohibits commercial use of his

property and the plat note that denies Lots 2C and 2D access

to Route 29 if developed residentially.

     Wood claimed he did not know of the restrictions or

thought they would expire in twenty years.    However, the very

deed by which Wood acquired title to Lots 2C and 2D 6




     6
       This deed, from Charles W. Hurt and Letitia H. Hurt to
Wendell W. Wood, was dated December 7, 1968, and recorded
                               15
specifically provided that the lots were subject, without any

time limitation, (1) to the restrictions set forth in the

Kelsey-Hurt deed of 1959, which included the noncommercial use

restriction, and (2) the restrictions set forth in "an

instrument with the plat of Subdivision of Section C,

Carrsbrook," the plat containing, of course, the restriction

denying Lots 2C and 2D access to Route 29 if developed

residentially.   But, whether Wood actually knew of the

existence of the restrictions or their length, his fate is to

be determined by what he should have known, harsh though the

result might be.   "Equity should not set at naught solemn

covenants voluntarily made, when to do so would enrich the

covenantor[ 7 ] and injure the covenantee." 8   Booker, supra, 188

Va. at 152, 49 S.E.2d at 319.

                       Change of Conditions

     In his remaining assignment of error, Wood alleges that

"[t]he trial court erred in failing to remove the residential

restrictive covenant as to all four lots (Lots 1E, 1C, 2C, and



among the land records of Albemarle County in Deed Book 452 at
Page 475.
     7
       Wood concedes the obvious — "the property was more
valuable for commercial rather than for residential uses."
     8
       Batten presented evidence about how the residents of
Carrsbrook Subdivision would be damaged if Wood is allowed to
develop his property commercially. The prospective damage
took the form of decreased value of Carrsbrook property,
additional noise and artificial light, and increased traffic
congestion on Carrsbrook Drive, the primary entranceway for
the subdivision.
                               16
2D) in light of the overwhelming evidence that established a

change of conditions so radical as practically to destroy the

essential objects and purposes of the restriction."

     Wood stresses the changes, outlined supra, that have

taken place in the Route 29 corridor since Carrsbrook

Subdivision was created in 1969, viz., the previous two-lane

road with residences and small businesses strung along each

side has become a heavily traveled eight- to ten-lane

thoroughfare lined on each side with shopping centers, hotels,

restaurants, automobile dealerships, and other types of

businesses.   Further, Wood also stresses the fact that "no

residential houses have been built or used from the city

limits of Charlottesville to the South Rivanna River on either

the east or west side of Route 29 in the last thirty years." 9

     The test for determining whether changed conditions

warrant the nullification of a restrictive covenant was

enunciated in Deitrick v. Leadbetter, 175 Va. 170, 8 S.E.2d

276 (1940), as follows:

     "No hard and fast rule can be laid down as to when
     changed conditions have defeated the purpose of
     restrictions, but it can be safely asserted the changes



     9
       Wood also stresses the zoning changes that have occurred
along both sides of Route 29 since the restrictive covenant
was created. However, in Ault v. Shipley, 189 Va. 69, 75, 52
S.E.2d 56, 58 (1949), this Court said that "a zoning law
cannot constitutionally relieve land within the district
covered by it from lawful restrictive covenants affecting its
use for business purposes."
                               17
     must be so radical as practically to destroy the
     essential objects and purposes of the agreement."

175 Va. at 177, 8 S.E.2d at 279 (quoting Rombauer v. Compton

Heights Christian Church, 40 S.W.2d 545, 553 (Mo. 1931)).

     Wood takes the trial court to task, saying that the court

"ignored the radical changes that have occurred in and around

the subject properties since 1959, but rather focused

myopically on whether or not there have been changes within

the interior of the Subdivision."     This is an unfair

representation of what the trial court ruled in this case.

     In a letter opinion, the trial court wrote: "[Wood has]

failed to prove that radical changes both in and around the

neighborhood have occurred such that the purpose of the

restrictive covenant is destroyed."    (Emphasis added.)   Thus,

it is clear the court did not focus upon conditions in

Carrsbrook Subdivision alone but on conditions "around the

neighborhood" as a whole.

     This is in accord with Virginia law.    In Booker, supra,

relief was sought from a restrictive covenant prohibiting

commercial uses of residential lots in a subdivision.      It was

alleged that there had been a change of conditions so radical

as to destroy the essential objectives and purposes of the

covenant.   These changes included the operation of a nearby

zipper factory, the conversion of one of the lots into a hard-

surfaced road leading to the factory, the widening of the road

                               18
on which all the lots abutted from a two-lane roadway,

carrying a small amount of traffic, to a heavily traveled

four-lane federal highway, the construction nearby of a large

shopping center, and the presence of a skating rink across the

road from one of the lots.   188 Va. at 149, 49 S.E.2d at 317.

     The trial court refused to remove the restrictive

covenant.   This Court affirmed.    We said that "if a radical

change takes place in the whole neighborhood so as to defeat

the purpose of the restrictions and render their enforcement

inequitable and oppressive, equity will not compel observance

of them by injunction."   Id. at 148-49, 40 S.E.2d at 317.

(Emphasis added.)   See also Marks v. Wingfield, 229 Va. 573,

576, 331 S.E.2d 463, 465 (1985).

     Wood seemingly would have the rule the other way — ignore

the circumstances within the property protected by a

restrictive covenant and focus only upon the surrounding area.

However, common sense tells us that when the issue is whether

a restrictive covenant still serves its intended purpose and

that purpose is to protect the lots in a particular

subdivision from commercial uses, the conditions existing

within the subdivision must be examined along with those

existing in the surrounding area in order to determine the

issue fairly.   To ignore the conditions within the subdivision

and to hold the covenant unenforceable solely because of


                               19
changed conditions elsewhere would deny the lot owners the

protection to which they are entitled according to a solemn

covenant voluntarily made, and that would be grossly unfair.

     What is required, therefore, is a leveling exercise in

which fair consideration is given both to conditions in the

subdivision and those in the surrounding area.    Here, the

facts are that there have been no changes within Carrsbrook

Subdivision other than the aging of homes and the maturing of

trees but there have been substantial changes within the

surrounding area.   After giving fair consideration to both

situations, we are of opinion the changes are not so radical

as to defeat the purpose of the covenant.

     Finally, Wood cites Chesterfield Meadows Shopping Center

Associates, L.P. v. Smith, 264 Va. 350, 568 S.E.2d 676 (2002).

That case involved a covenant that restricted the use of one

piece of property to protect a historic home located on other

property across the road.   Later, the historic home was moved

to a different location and, in the meantime, the surrounding

area had been transformed into a thriving commercial area.

This Court affirmed the trial court's nullification of the

covenant, holding that such a radical change satisfied the

standard articulated in Booker and its progeny.    Id. at 356-

57, 568 S.E.2d at 680.   However, Chesterfield Meadows is

inapposite.   Lacking here is a radical change like moving a


                               20
historic home from its protected location, which negates the

very purpose of the restrictive covenant.

                          Conclusion

     For the reasons assigned, the judgment of the trial court

will be affirmed.

                                                      Affirmed.




                              21