Benjamin Crossing Homeowners’ Association, Inc. v Heide (IN)

Summary:  Restrictive covenants in a private agreement exist independent of a zoning ordinance and may be enforced by the parties to the private agreement, even if a similar zoning ordinance is prohibited by state law.    

Restrictive Covenants

Benjamin Crossing Homeowners’ Association, Inc. v Heide, 961 NE2d 35 (Ind Ct App 2012). 

Facts:  Two independent homeowners, Rose Heide and David F. Wilkerson, operated licensed child care homes in their respective residences located in Benjamin Crossing, a planned unit development (“PUD”).  The developers of Benjamin Crossing executed a Declaration of Covenants, Conditions and Restrictions (“Declaration”) that set forth the restrictive covenants for Benjamin Crossing.  The Declaration stated in part that homeowners were prohibited from operation of a business in residences in the PUD. 

The restrictive covenant was also incorporated into the PUD ordinance for Benjamin Crossing, but Indiana law, Indiana Code Section 36-7-4-1108, prohibits enforcement of a zoning ordinance that prohibits the operation of a child care home in a residence. 

In October 2008, Heide and Wilkerson filed a complaint seeking damages and a declaratory judgment that the Building Commission and Homeowners’ Association could not enforce the restrictive covenant that prohibits the operation of a child care home in their residences.  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. 

The trial court granted the association’s motion to dismiss the complaint.  The association then filed a motion for summary judgment on its counterclaim.  Following a hearing, the trial court reversed its prior order granting the association’s motion to dismiss the complaint and then granted summary judgment for Heide and Wilkerson on the association’s counterclaim.  The trial court’s reasoning was that “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 operator’s residence.”  The association appealed. 

Holding:  Reversed and remanded with instructions.  The court of appeals found that the PUD ordinance had no effect on the association’s authority to enforce the private restrictive covenant.  The creation of a PUD is a legislative act and PUD provisions are zoning ordinances.  On the other hand, “[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.”  Restrictive covenants, such as the ones in the declaration, are agreements between private parties and are enforceable by those parties.  Zoning ordinances, such as the PUD ordinance in this case, arise from an exercise of the government’s police power and have no effect on restrictive covenants.  Thus, zoning ordinances and restrictive covenants do not affect each other.  Consequently, the trial court’s holding was contrary to law.  The restrictive covenants did not cease to exist independently when they were adopted and included in the PUD ordinance.  The restrictive covenants exist independent of the PUD ordinance and may be enforced by the association pursuant to the terms of the Declaration. 

The court reversed the grant of summary judgment in favor of Heide and Wilkerson and remanded with instructions for the trial court to enter summary judgment of the association on its request for injunctive relief and for further proceedings to determine an award of damages, if any.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Mon, 04/30/2012 - 1:08pm