LONNIE B. WILLIAMS,
Plaintiff
v
.
New Hanover County
No. 00 CVS 1427
KENNETH E. HAIGLER and
PAULA O. HAIGLER,
Defendants
Marshall, Williams & Gorham, L.L.P., by John L. Coble, for
plaintiff.
Brown & Bunch, PLLC, by Charles Gordon Brown, and Taft, Taft
& Haigler, P.A., by Thomas F. Taft, Sr., for defendants.
STEELMAN, Judge.
Plaintiff and defendants are owners of adjacent properties in
Quail Woods subdivision in Wilmington, North Carolina. Plaintiff
is the owner of 6428 Quail Run, and defendants are the owners of
6420 Quail Run. All lots in Quail Woods subdivision are subject to
restrictive covenants, which provide that “no dwelling shall be
erected on the property other than a single family dwelling.”
However, the restrictive covenants do allow for “a garage, guest
house, or servants quarters.” Plaintiff filed this action on 7
April 2000 to compel defendants to remove a structure from theirproperty which plaintiff contends was built by the prior owner in
violation of the restrictive covenants.
The property at 6420 Quail Run was previously owned by a
Bahamian company, Fidelity Worldwide Investments, S.A. (“FWI”),
which purchased the property on 8 June 1993. Jeffery Collins,
also known as Jeff White, represented himself to be an agent for
FWI and resided at 6420 Quail Run. In 1994, a separate, detached
three-car garage with an overhead storage room was constructed on
the property. Thereafter, plaintiff learned of Collins' plans to
build a two-level “guest house” on the property. Plaintiff and
other property owners in the Quail Run subdivision filed a lawsuit
against FWI to prevent construction of the guest house, contending
that it would violate the restrictive covenants. Williams et al.
v. Fidelity Worldwide Investments, S.A., No. 94 CVS 1908 (New
Hanover County Superior Court) [hereinafter “FWI action”].
FWI proposed to resolve the FWI action by building a
“boathouse” rather than a “guest house.” Plans for the building
were described in a 16 March 1995 letter to plaintiff's attorney,
which stated in part:
The boathouse would be on pilings, with
finished dry wall interior, and will have one
large recreation room or storage loft, with a
fish cleaning counter and sink, and a separate
bath and shower area. The area on the drawing
designated “storage loft” is a single large
room. The only divided space will be the bath
and shower area. It would not have any
cooking facilities, except an outdoor BAR-B-
QUE on the deck. It will not have any
bedrooms or sleeping quarters and will be
equipped for recreational use by children and
adults. The boathouse will be equipped for
year-round use and will be insulated, withheating and air conditioning. It will have
all utilities, including telephone and
television, washer and dryer and a fireplace.
The outdoor decks will also provide space for
playing and sitting.
The letter was accompanied by drawings of the proposed boathouse.
The drawings depicted no second floor, no stairway from the first
to attic level, no room adaptable for use as a bedroom, and no
attic level bathroom.
The parties to the FWI action agreed to FWI's proposal to
build the boathouse in a consent judgment, which was entered by
Judge W. Allen Cobb, Jr. on 5 July 1995. The consent judgment,
which was recorded in the Office of the New Hanover Register of
Deeds, provided as follows:
3. [T]he Restrictive Covenants shall be
interpreted and enforced in a uniform fashion
in accordance with this Judgment By Consent
and that all parties shall henceforth
interpret and enforce the Restrictive
Covenants in accordance with this Consent
Judgment. . . .
4. The Restrictive Covenants provide that the
“property shall be used for residential
purposes only and no dwelling shall be erected
on the property other than a single family
dwelling. . . .”
5. In addition to a single dwelling, the
Restrictive Covenants authorize the
construction of “a garage, guest house, or
servants quarters.” To avoid violation of the
prohibition against a second dwelling, any
other structure constructed on property
subject to the Restrictive Covenants must be
configured so that it cannot be used as a
second dwelling. To that end, the parties
have agreed that for all properties subject to
the Restrictive Covenants, except for a single
dwelling, any additional structure, whether
existing or later constructed, shall not
contain any kitchen or similar cookingfacilities, or any bedrooms or other sleeping
accommodations nor shall any part thereof be
used as a kitchen or for sleeping
accommodations. Recreational facilities such
as a pool cabana, barn, boathouse or similar
structure will be permitted, but only in
accordance with the limitations expressed
herein and in the Restrictive Covenants.
(emphasis added)
6. By letter dated March 16, 1995 from
counsel for defendant, including the enclosed
drawings, plaintiffs have received and
reviewed the description and drawings for a
boathouse to be constructed by defendant
Fidelity Worldwide Investments, S.A. on its
property. Plaintiffs have determined that the
proposed plans are in accord with this
Judgment By Consent and the Restrictive
Covenants and therefore consent to
construction of the proposed boathouse in
accordance with the approved plans . . . .
(emphasis added)
. . .
9. This Judgment by Consent and the
interpretation of the Restrictive Covenants,
and the limitations and restrictions stated
herein in accordance with the Restrictive
Covenants, are covenants that run with the
land and shall be binding upon the defendant,
each of the plaintiffs and their respective
heirs, successors and assigns, any one of whom
may enforce this Judgment. This Judgment By
Consent shall be recorded in the office of the
Register of Deeds and shall apply to the
property owned by the defendant and each of
the plaintiffs.
Several months after entry of the consent judgment, FWI commenced
construction on the boathouse.
On or about 5 February 1997, law enforcement agencies raided
the residence located at 6420 Quail Run. Collins was arrested as
an escaped felon. Following the raid, plaintiff learned that the
boathouse had not been constructed in accordance with the terms ofthe consent judgment entered in the FWI action. On the first level
above the boathouse, there was a large open area with a kitchen,
microwave, sink, refrigerator, bathrooms, and an enclosed stairway
leading to a second level. On the second level, there were
bedrooms and a bathroom.
On 3 March 1997, the United States of America instituted an
action for forfeiture in rem against the property located at 6420
Quail Run, Wilmington, North Carolina in the United States District
Court for the Southern District of Indiana. The forfeiture was
sought under Title 21 of the United States Code as proceeds of
illegal drug activity and as being property involved in money
laundering transactions under Title 18 of the United States Code.
On 27 June 1997, the United States District Court entered an order
forfeiting the property located at 6420 Quail Run to the United
States of America. This same order approved the sale of the
property to the defendants for the sum of two million dollars.
Plaintiff learned of the impending sale of the property to
defendants, and by letter dated 10 July 1997 notified them of
several matters concerning the property, including the violations
of the 1995 consent judgment in the FWI action. A copy of the 1995
consent judgment and the letter from FWI's counsel dated 16 March
1995 were enclosed with the letter.
On 29 July 1997, the United States District Court entered an
order modifying the terms of the sale of the property to
defendants. The purchase price of the property was reduced by
$475,000 for necessary repairs to the property. The purchase pricewas further reduced by an additional $125,000 because of “title
objections relating to drainage issues, the boathouse and garage.”
The United States acknowledged that “the appraised value of the
property did not take into account the loss of value caused by
restrictions placed on the use and/or loss of the boathouse and
garage by restrictive covenants in the chain of title.” Defendants
purchased the property on 30 July 1997.
On 7 April 2000, plaintiff filed this lawsuit seeking
enforcement of the 5 July 1995 consent judgment and removal of the
boathouse. Defendants filed a counterclaim seeking a declaration
that they may construct or own a garage, guest house and servant's
quarters on their property. A non-jury trial was held in the New
Hanover County Superior Court, before Judge Lanning, which
commenced on 22 October 2001.
On 25 October 2001, the trial court orally announced its
ruling in favor of plaintiff in open court. The trial court
directed that the parties make additional submissions to the court
within sixty days on the appropriate remedy to bring the boathouse
into conformity with the consent judgment and restrictive
covenants. Defendants filed their Submission Regarding Remedy on
21 December 2001. The trial court conducted a further hearing on
the question of an appropriate remedy on 4 September 2002. The
trial court's judgment on the original hearing was filed on 4
September 2002, and its order setting forth the appropriate remedy
was filed on 29 October 2002. The court order directed that the defendants modify the
boathouse by: (a) the removal of excess cabinetry in the “kitchen
area” so that it did not exceed seven feet in length; and (b)
lowering the roof of the boathouse by six and a half feet to
conform to the 1995 consent judgment. If defendants failed to
elect to make these modifications within thirty days, then the
boathouse was to be removed within sixty days. The trial court
stayed its order pending appeal. On 27 November 2002, both
plaintiff and defendants gave notice of appeal to this Court.
I. Defendants' Appeal
In their first assignment of error, defendants argue the trial
court committed reversible error by finding facts and concluding as
a matter of law that the boathouse violated the restrictive
covenants. We disagree.
The standard of appellate review for a judgment entered after
a non-jury trial is whether any competent evidence in the record
supports the trial court's findings of fact and whether the
findings of fact support the conclusions of law and the ensuing
judgment. Sessler v. Marsh, 144 N.C. App. 623, 628, 551 S.E.2d
160, 163 (2001). Findings of fact made by the trial court are
binding on appeal if there is competent evidence to support them,
even if there is evidence to the contrary. Id.
With regard to this assignment of error, defendants argue that
the restrictive covenants allow “a garage, guest house or servants
quarters” and that the structure in question was a “guest house.” This issue was previously litigated by the parties in the FWI
action and resolved as to the very structure which is the subject
of this action. Paragraph five of the consent judgment in the FWI
action specifically discusses the “garage, guest house or servants
quarters” language. It goes on to specifically define the
prohibition of a second dwelling under the restrictive covenants.
In order not to violate this prohibition, the structure “shall not
contain any kitchen or similar cooking facilities, or any bedrooms
or other sleeping accommodations, nor shall any part thereof be
used as a kitchen or for sleeping accommodations.” Paragraph six
of the consent judgment states that the boat house proposed by FWI
was in accordance with the restrictive covenants, as interpreted by
the consent judgment.
The trial court found as facts that the boathouse: (1) was
configured so that it could be used as a second dwelling; (2)
contained a kitchen; (3) contained one or more bedrooms; and (4)
was intentionally constructed by FWI in violation of the
restrictive covenants as interpreted by the consent judgment. Each
of these findings was supported by competent evidence in the
record. These findings, in turn, support the trial court's
conclusion that the boathouse, as constructed, violated the
restrictive covenants and the consent judgment. This assignment of
error is without merit.
In their second assignment of error, defendants argue the
trial court erred by finding as fact and concluding as a matter of
law that the boathouse violated the consent judgment. They arguethat the provisions of the 5 July 1995 consent judgment were
extinguished by the forfeiture of the property to the United
States. We disagree.
The United States acquired title to 6420 Quail Run as proceeds
of drug trafficking and proceeds traceable to money laundering
activities pursuant to 18 U.S.C. § 981(a)(1)(A) and 21 U.S.C. §
881(a)(6). Federal law states that title to property subject to
forfeiture “shall vest in the United States upon commission of the
act giving rise to forfeiture.” 18 U.S.C. § 981(a)(1)(A) (2003); 21
U.S.C. § 881(a)(6) (2003).
Defendants argue that pursuant to the relation-back provision
of the criminal forfeiture statute, 21 U.S.C. § 853(c), title to
6420 Quail Run vested in the United States no later than 8 June
1993, the date Collins used his drug trafficking and money
laundering proceeds to purchase the property. They argue that
because the consent judgment was not entered until 5 July 1995, the
United States' title to 6420 Quail Run is prior in time and
superior in right to the consent judgment. Defendants contend that
as grantees of the United States, they hold the property free and
clear of the provisions of the consent judgment. This reasoning is
incorrect.
The relation-back provision of 21 U.S.C. § 853(c), which
allows the government to reach forfeitable assets transferred to
third parties, was intended to prevent defendants from shielding
their assets from forfeiture by transferring them to third parties.
United States v. McHan, 345 F.3d 262, 272 (4th Cir. 2003). In thiscase, there was no attempt to transfer the property to defeat the
claims of the United States. The restrictions applicable to all
lots in Quail Woods subdivision, including the property located at
6420 Quail Run, were in effect prior to FWI acquiring the property
on 8 June 1993. The consent judgment of 5 July 1995 merely
construed the provisions of the restrictions that were already in
effect. The deed from the United States to defendants expressly
stated that the conveyance was made subject to the restrictions.
Further, the modified judgment and order of sale, dated 29 July
1997, acknowledged the validity of the restrictions and the loss of
value to the property based upon their effect on the use or loss of
the boathouse. This was one of the factors which led to defendants
negotiating a $125,000 reduction in the sales price of the
property. This assignment of error is without merit.
In their third assignment of error, defendants argue that the
trial court committed reversible error by requiring removal or
modification of the boathouse. We disagree.
A mandatory injunction may be issued to require modification
or removal of a structure in violation of restrictive covenants.
Buie v. Johnston, 313 N.C. 586, 589, 330 S.E.2d 197, 198 (1985).
The propriety of an injunction “depends upon the equities between
the parties.” Ingle v. Stubbins, 240 N.C. 382, 390, 82 S.E.2d 388,
395 (1954). When a trial court makes the decision, based on a
balancing of the equities, that a mandatory injunction is
appropriate, the court should make appropriate findings of fact and
conclusions of law, sufficient to allow appellate review for abuseof discretion. See Roberts v. Madison County Realtors Ass'n, 344
N.C. 394, 401, 474 S.E.2d 783, 788 (1996).
In its Order on Remedy and Final Judgment, the trial court
directed that certain modifications be made by defendants to the
boathouse. In the event that defendants elected not to make these
modifications, then defendants were ordered to remove the boathouse
from the property. The only modification which defendants contest
is the lowering of the roof of the boathouse by a minimum of six
and one-half feet, eliminating the dormers and windows of the attic
level of the structure.
Defendants contend that the dormers and windows can be removed
from the second story of the boathouse for a much lower cost than
the remedy ordered by the trial court. Once the dormers and
windows were removed, the second story of the boathouse could not
be used as a “sleeping room” under section 303.1 of the North
Carolina Residential Building Code. Defendants assert that it was
an abuse of discretion for the trial court to order the more
drastic remedy when a less costly alternative was available.
The law does not require the trial court to adopt a party's
less costly proposed remedy. This case is remarkably similar to
the case of Higgins v. Builders & Finance, Inc., 20 N.C. App. 1,
200 S.E.2d 397 (1973). In Higgins, the defendant constructed
duplex dwellings on lots subject to restrictive covenants that
limited dwellings to single family units. Id. at 2-3, 200 S.E.2d
at 399. The defendant made certain minor modifications to the
units, which it contended brought them into compliance with therestrictions. Id. at 3-4, 200 S.E.2d at 400. The trial court
concluded that the proposed modifications did not convert the units
to single family residences, and ordered the units removed. Id. at
7, 200 S.E.2d at 402. This Court affirmed the trial court, holding
that: “When all facts found by the trial court are considered
together, they fully support the court's conclusion that the
structures erected by defendant 'have not as a matter of law been
converted into single family residential dwellings to conform with
the restrictive covenants . . . .'” Id. at 10, 200 S.E.2d at 404.
Thus, the issue is whether the trial court's findings are
supported by the evidence and the findings in turn support the
conclusions of law. In this review, we consider the findings and
conclusions contained in both the Judgment dated 4 September 2002,
and the Order on Remedy and Final Judgment dated 18 October 2002.
The trial court made the following findings relevant to this
issue:
7. The Judgment By Consent provided . . .
“any other structure constructed on property
subject to the Restrictive Covenants must be
configured so that it cannot be used as a
second dwelling.”
. . .
12. [T]he “boathouse” had not been constructed
in accordance with the letter of March 16,
1995, and the drawings which had been approved
by the parties, but had been deliberately
constructed in violation thereof, as well as
in violation of the restrictive covenants and
Judgment By Consent.
. . .
21. The “boathouse” violates the restrictive
covenants as interpreted and construed by theJudgment By Consent in each of the following
respects:
A. As configured it can be used as a
second dwelling.
B. It contains a “kitchen” even though
there is not a range.
C. It contains a second living level.
D. It contains one or more bedrooms.
. . .
23. In balancing the equities between the
parties, the Court has considered the
following:
. . .
C. Defendants had record and personal
notice of the Judgment By Consent
and that the “boathouse” was
constructed in violation thereof.
D. Defendants negotiated a reduction in
the purchase price of $125,000
because of the “boathouse”.
We find that each of these findings are supported by evidence in
the record, and that they in turn support the court's conclusions
of law, including that the equities in the case favored plaintiff.
We further find that the trial court did not abuse its
discretion in fashioning a remedy in this matter. The trial court
could have ordered the total removal of the boathouse as an
appropriate remedy for the violations. Instead, the court allowed
defendants the opportunity to bring the structure into compliance
with the restrictions as interpreted by the consent judgment. This
assignment of error is without merit.
II. Plaintiff's Appeal In his first assignment of error, plaintiff argues the trial
court committed reversible error by finding that the boathouse
could be modified to substantially conform to the restrictive
covenants and the consent judgment. We disagree.
The trial court concluded in its Order on Remedy and Final
Judgment that the boathouse could be modified to substantially
comply with the restrictive covenants and consent judgment. As
discussed above, this conclusion is supported by the trial court's
findings of fact, which are supported by competent evidence. This
assignment of error is without merit.
In his second assignment of error, plaintiff argues the trial
court committed reversible error in that its Order on Remedy and
Final Judgment filed 29 October 2002 contradicts its Judgment of 4
September 2002. We disagree.
Whether a mandatory injunction to compel the removal or
modification of a building is appropriate “depends upon the
equities between the parties.” Ingle, 240 N.C. at 390, 82 S.E.2d
at 395. “[S]uch a balancing of equities is clearly within the
province of the trial court.” Crabtree v. Jones, 112 N.C. App.
530, 534, 435 S.E.2d 823, 825 (1993). In the 25 October 2001
Judgment, the trial court balanced the equities between the parties
and concluded that the equities favor plaintiff. As discussed
above, this conclusion of law is supported by the trial court's
findings of facts, and those findings of facts are supported by
competent evidence. Therefore, the court's conclusion that the
equities favor plaintiff is binding on appeal. In the 29 October 2002 Order on Remedy, however, the trial
court concluded that “certain equitable considerations favor the
defendants.” We agree with plaintiff that there are no findings to
support this conclusion. However, the trial court's remedy
ordering modification or removal of the offending structure was
consistent with its balancing of the equities in favor of
plaintiff. Therefore, the contradicting statement that certain
equities favor the defendants does not amount to reversible error.
See Stewart v. Dixon, 229 N.C. 737, 738, 51 S.E.2d 182, 183 (1949)
(“It is incumbent upon the appellant not only to show error in the
ruling of the trial court but also that the error complained of was
injurious to her cause, and that but for such ruling a different
finding on the facts would have resulted.”). This assignment of
error is without merit.
In his third assignment of error, plaintiff argues the trial
court committed reversible error by failing to enter a mandatory
injunction requiring removal of the boathouse. We disagree.
Whether an injunction is appropriate relief to restrain the
violation of a restrictive covenant is a matter within the sound
discretion of the trial court. Buie v. High Point Assocs. Ltd.
Partnership, 119 N.C. App. 155, 161, 458 S.E.2d 212, 216 (1995).
“'[T]he appellate court will not interfere unless such discretion
is manifestly abused.'” Id. (quoting 20 Am. Jur. 2d Covenants,
Conditions, and Restrictions § 313 (1965)).
As discussed in detail above, evidence in the record indicates
that the modifications ordered by the trial court will bring theboathouse into substantial compliance with the consent judgment and
restrictive covenants. Plaintiff has not shown that the trial
court abused its discretion in giving defendants the option to
modify their home rather than removing it. This assignment of
error is without merit.
AFFIRMED.
Judges TYSON and LEVINSON concur.
Report per Rule 30(e).
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