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Sandomire v. Brown

Intermediate Court of Appeals of Hawaii

March 29, 2019

DANIEL M. SANDOMIRE; KATY YEN-JU CHEN; TRUDI MELOHN, individually and as Co-Trustee under the William Charles Melohn III Revocable Trust dated June 4, 2010 and Co-Trustee under the Trudi Melohn Revocable Trust dated June 4, 2010; and WILLIAM CHARLES MELOHN III, individually and as Co-Trustee under the William Charles Melohn III Revocable Trust dated June 4, 2010 and Co-Trustee under the Trudi Melohn Revocable Trust dated June 4, 2010, Plaintiffs-Appellees,
v.
DAVID EDWARD BROWN and LANHUA KAO BROWN, Defendants-Appellants

          APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CIVIL NO. 15-1-2267)

          Bruce D. Voss, Christian D. Chambers, (Bays Lung Rose & Holma), for Defendants-Appellants.

          Michael W. Gibson, Francis P. Hogan, (Ashford & Wriston), for Plaintiffs-Appellees.

          FUJISE, PRESIDING JUDGE, LEONARD AND REIFURTH, JJ.

          OPINION

          LEONARD, J.

         This case arises out of a dispute between neighbors over whether a proposed home addition would violate certain restrictive covenants that are applicable to their neighborhood. As discussed herein, we hold that the trial court erred in failing to first make a legal determination whether the express language of the height restriction is ambiguous. If, as a matter of law, the express language of the restrictive covenant is unambiguous, then there is no basis for a factual inquiry into the "reasonableness" of the restriction, as the trial court did in this case. In addition, we hold that the trial court erred in adopting an interpretation of the height restriction that would effectively add a requirement not expressly stated in the restrictive covenants. However, we conclude that the trial court did not err in applying the lot coverage area restriction. Finally, we conclude that the trial court's permanent injunctions are flawed and the attorneys' fees awards must be vacated. The case is remanded.

         Defendants-Appellants David Edward Brown and Lanhua Kao Brown (Browns or Defendants) appeal from the February 21, 2017 Final Judgment in Favor of Plaintiffs (Judgment), which was entered in favor of Plaintiffs-Appellees Daniel M. Sandomire, Katy Yen-Ju Chen, Trudi Melohn, and William Charles Melohn III (collectively, Plaintiffs), by the Circuit Court of the First Circuit (Circuit Court), [1] The Browns also challenge the Circuit Court's: (1) December 20, 2016 Order Granting Plaintiffs' Attorneys' Fees and Costs Based on the Declaration of Michael W. Gibson Regarding Attorneys' Fees and Costs Incurred by Plaintiffs (Attorneys' Fees Order); (2) May 25, 2016 Order Granting Plaintiffs' Motion for Preliminary Injunction (Order Granting Preliminary Injunction); (3) August 12, 2016 Findings of Fact, Conclusions of Law, and Order Granting Relief on Counts II and III (Order on Counts II and III); and (4) March 21, 2017 Order Granting in Part and Denying in Part Plaintiffs' Motion for Supplemental Attorneys' Fees and Costs (Supplemental Fees Order).

         I. BACKGROUND

         On November 23, 2015, Plaintiffs, neighboring homeowners to the Browns, filed the Complaint in this action, alleging, inter alia, that the Browns own real property, specifically, Lot 71 (the Subject Lot) on Alaweo Street, which is in the Waialae-Iki View Lots, Unit IV subdivision (Waialae-Iki View Lots), in Honolulu. The Complaint further alleged that the Browns intended to construct an addition to their home, which included, inter alia, adding a second floor onto their existing structure that, if constructed, would violate the restrictive covenants running with the Browns' land.[2] Plaintiffs alleged that the proposed addition would exceed the lot coverage maximum and violate the height restriction, which are set forth as follows in the Subdivision Documents:

1. View Channels, Setback Lines, Building Area and Lot Coverage Area.
(d) The Lot Coverage Area, being the maximum total area under roof and trellis work within the wall lines and/or the outer vertical support members (including balcony railings) of all buildings on the lot, shall amount to not more than one-third (1/3) of the area of the lot.
12. Height of Buildings, Antennas or Chimneys.
(a) No portion of any building or other structure, except antennas and chimneys, shall be more than 18 feet above the highest existing ground elevation at the building or structure. For houses with setbacks greater than that required, the height shall not project above an imaginary plane constructed over the building area as follows:
(1) Commencing at a corner of the building area with the highest ground elevation, measure vertically to a point 18 feet above the corner. This point shall be a corner of the "height plane".
(2) Slope this plane downward at a ratio of 1 vertical to 10 horizontal towards the corner of the building area with the lowest ground elevation.

         Plaintiffs sought declaratory and injunctive relief to enjoin the Browns from proceeding with their proposed construction. Plaintiffs also requested attorneys' fees and costs.

         On March 31, 2016, Plaintiffs filed a Motion for Preliminary Injunction, based on the allegations in the Complaint, but further arguing that the Browns' proposed construction would violate additional restrictive covenants.[3] At the hearing on the motion, the Circuit Court stated that "with regard to the height restriction only, the Court's ruling is that the likelihood of success factor has been met" and granted Plaintiffs' motion.

         At an evidentiary hearing on the merits of Counts II (Permanent Injunction) and III (Declaratory Relief), which was held on July 5, 7, 8, and 12, 2016, Plaintiffs presented testimony from Plaintiff Daniel Sandomire (Sandomire), as well as architects James Reinhardt (Reinhardt) and Fritz Johnson (Johnson).

         Sandomire testified that he purchased his home in the Waialae-Iki View Lots and has lived there with his family since 2013. He and his family decided to move there because of the "beautiful neighborhood" that is close to his children's schools and has a "very attractive . . . varying architecture and landscape design."

         Sandomire testified that in the summer of 2014, he learned that the Browns were exploring the possibility of constructing an addition on their home. Out of concern about the possible construction, Sandomire and the other surrounding neighbors drafted a letter to the Browns, introducing themselves, reminding the Browns of the applicable height restriction within the Subdivision Documents, and requesting to view the preliminary drawings of any proposed construction. Through an exchange of emails, Sandomire learned that the Browns intended to build the addition to their home, but that the Browns were interpreting the applicable height restriction to allow a much higher structure than Sandomire believed was permitted.

         Sandomire testified that he was very concerned that the proposed construction would negatively impact himself and his immediate neighbors as well as the community, which was designed to allow for ocean and Diamond Head views, because the Browns' proposed plans would "destroy the views of the adjacent houses to him." Sandomire was also concerned that a violation of the Subdivision Documents would leave only the LUO to govern the Waialae-Iki View Lots, which would "impact[] the character of the neighborhood tremendously."

         The Circuit Court allowed Sandomire to give expert testimony in the area of architecture and for the interpretation of covenants, conditions, and restrictions (CC&Rs). First, Sandomire cited the lot coverage provision under the Subdivision Documents and opined that the Browns' proposed construction exceeds the maximum, because the proposed construction would cover thirty-nine percent of the lot. Sandomire testified that even if the Browns did not build a deck that was included in their original plans it would still exceed the maximum because the Browns' current home is already in excess of the thirty-three percent lot coverage allowance. During cross-examination, Sandomire acknowledged that his calculation incorrectly included a side lanai that is not included in the construction plans, but asserted that there is a portion of additional coverage that will still need to be included in the calculation. He also testified he was aware that some of the trellis work would be removed by the construction, but he did not have a calculation for how that would impact the lot coverage.

         As to the height limitation, Sandomire testified that he interprets the applicable language in the Subdivision Documents to provide "two methods to determine the height" and that "it's optional which one you would use." Sandomire opined that under "Method 1 . . . we go from a point 18 feet above the building and follow the grade," creating a limitation that "would descend according to the slope of the lot." Under "Method 2," for "houses with setbacks greater than required," the point would begin "18 feet above the highest building area at the property line, . . . draw descending at an even grade towards the lowest point . . . [by] one unit vertical over ten units." According to Sandomire, the Browns' proposed construction violated either method.[4] During cross-examination, Sandomire acknowledged that the Subdivision Documents do not guarantee an "unobstructed view from [his] property" and that there is "no view channel easement on his lot" or the Brown lot. However, during redirect, Sandomire explained that the "fact that there's not one there doesn't mean that you don't have any restrictions of building. You're still restricted to build only 18 feet."[5]

         Reinhardt testified for Plaintiffs as an expert in the area of architecture and the interpretation of CC&Rs. Reinhardt testified that he is generally familiar with the Subdivision Documents of Waialae-Iki View Lots, and that he had reviewed the Browns' proposed addition, which, in his opinion, fails to comply with the Subdivision Documents by exceeding the one-third lot coverage maximum and by exceeding the height limits.

         As for lot coverage, Reinhardt testified that when the Brown residence was originally constructed, the Tax Department documents indicated that the square footage equated to the allowable thirty-three and a third percent. Subsequently, however, two trellises were built that were not shown on the original permits, which added approximately 200 square feet, thus putting the lot coverage "over the allowable maximum . . . before [the] Brown[s] had got involved." Finally, the proposed addition covers three areas of the lots that were not previously covered, which takes them "well over" the one-third lot coverage maximum. During cross-examination, Reinhardt explained that even if the first-floor deck proposed in the drawings was not under roof, it would still count as lot coverage per the allowance in the Subdivision Documents.

         Reinhardt also testified that he interpreted the height restriction as Sandomire had, as providing for two "methods" and that the proposed construction would exceed either height restriction method.[6] Reinhardt recognized that the height restriction provision does not include "either/or" language but that he believes it is clear from "how it is then described that you have to use one or the other." Reinhardt acknowledged during cross-examination that the "highest existing ground elevation" referred to a "single point" and that "you cannot exceed 18 feet above [the] point" but reiterated that his interpretation of that language is that it is "a sloping plane parallel to the grade." Reinhardt also testified that the Browns' house has setbacks greater than required on all sides and that "Method 2 must have been used when this house was originally built," but reiterated that, because the methods are options, "Method 1, the parallel- to-the-grade, works better in this lot, so that's what they used."

         Johnson also testified as an expert in the area of architecture and with respect to interpreting CC&Rs, but only to offer his opinion regarding the height restriction as applied to the Browns' proposed construction. Johnson testified that he had made a site inspection in Waialae-Iki View Lots in November 2015, during which he met with the Sandomires, viewed the drawings for the Sandomire home, a mass grading plan, permit drawings for the Browns' house, the existing house, and the topographic survey for the house. Johnson viewed the Browns' property from both the Sandomire and Melohn residences and from the street side. Johnson also reviewed the Subdivision Documents and the Browns' proposed construction drawings. Additionally, Johnson testified that he had previously designed three homes in the Waialae-Iki View Lots and thus was familiar with the height restrictions. Johnson initially testified that he had designed three homes, but on cross-examination admitted that he had designed a fourth but said he could not remember the address and "didn't want to estimate or guess." During cross-examination, counsel for the Browns asked whether Johnson's drawings for those other homes would indicate, as is the standard practice, the "call-outs" for the Waialae-Iki View Lots CC&R height restrictions. Johnson acknowledged that it would be standard practice but declined to verify that the drawings he was shown during his testimony showed "the 18-foot horizontal call-out."

         Johnson testified that he was "familiar with Method 1 and Method 2" of the height restriction and that he did not believe that the Browns' proposed construction complied with either. Regarding the other houses he designed in Waialae-Iki View Lots, Johnson testified that he used Method 2 for all of the homes because "when [he] went through the design review process, Method 1 did not apply as a horizontal plane. It followed the grade of the land." He also explained the review process he went through with the design review committee when it was in existence.

         During cross-examination, Johnson admitted that the height restriction provision does not include the language "following the existing grade" or language that Method 2 is "intended to be a bonus." He acknowledged the section in his report in which he described "different ways height restrictions can be set forth in [covenants]" and that "18 feet high at the highest buildable point and follow the grade over the entire lot" is different than "18 feet above the highest existing ground elevation at the building or structure." Finally, he acknowledged that he still had unanswered questions regarding when a house has setbacks greater than required in order to "qualify" for Method 2.

         Following Johnson's testimony, Plaintiffs rested their case and the Browns moved for a judgment as a matter of law on all issues. The Circuit Court granted the motion in part as described in note 3, supra.

         Defendant David Brown (Brown) testified first for the defense and then called architects Terry Tusher (Tusher) and Kenneth Butterbaugh (Butterbaugh).

         Brown testified that he, along with his wife, are the owners of the Subject Lot, which is their intended retirement home. Brown testified that he and his wife do not plan to construct everything that is shown in the proposed construction drawings, as they do not intend to build a deck. However, Brown testified during cross-examination that they had not obtained nor attempted to obtain a construction modification permit. During re-direct, Brown testified that they did not request a construction modification permit because the modifications were minimal and he was told that the Building Department would not object to such a relatively minor modification.

         Tusher testified next for the Browns. Over Plaintiffs' objection, the Circuit Court permitted Tusher's testimony as an expert witness in the field of architecture and to interpret CC&Rs. Tusher initially testified that his interpretation of the height restriction is "that it was and is a horizontal line that is established by the highest buildable point of the corner of the property." Tusher later clarified, during cross-examination that this was a misstatement, because his opinion was that, for Method 1, the starting point is at the corner of the building with the highest existing ground elevation, which is not necessarily the highest buildable point on the lot. For "houses with setbacks greater than required," Tusher agreed that the height was restricted to an imaginary plane sloping at one foot vertical to ten horizontal, commencing at the corner of the building area with the highest ground elevation measured vertically to a point 18 feet above the corner. Tusher further agreed that there were two methods described in the Subdivision Documents and that they "defin[e] the height envelope that could be built." According to Tusher, the proposed construction for the Brown property "meets the height envelope" for the first method and that the second method "should not be imposed on the Brown lot."

         Tusher testified that he reviewed a number of drawings from Waialae-Iki View Lots that were submitted to the Building Department and that had received approvals by the Waialae-Iki View Lots design review committee. He initially did not review all of the available blueprints, but the ones he did review confirmed his interpretation of the height restriction as a horizontal plane either because "of a dimension that was tied to the corner of the building" or because "it was actually physically noted on the drawings." He did not find any notation indicating that the restriction followed the grade of the topography. Tusher subsequently conducted a modeling analysis of all available building permits that were issued for properties in Waialae-Iki View Lots, including one of the homes designed by Johnson, and found that of the drawings that referenced the Waialae-Iki View Lots height restriction, there were no properties that stayed within eighteen feet of the grade. During cross-examination, Tusher acknowledged that there were some drawings that did not include a "call-out" to the horizontal Waialae-Iki View Lots standards. Tusher also admitted that he did not have information for almost half of the homes in Waialae-Iki View Lots and that his report includes a mistake as to one of the diagrams, which he discovered after receiving drawings from Plaintiffs' counsel, apparently after the report was written.

         Tusher also testified that he had performed an analysis of the lot coverage for the proposed renovation of the Brown property. Upon reviewing the renovation drawings prepared for the Browns, Tusher opined that "there is a net reduction in the amount of lot coverage with this renovation." Tusher did not perform his own calculation of the Brown's current lot coverage, because it "wasn't important to us . . .in an existing condition" and the records for the original permit for the Brown residence do not exist. During cross-examination, Tusher agreed that the proposed addition would add lot coverage that was not covered today, but explained that the Browns' proposal included decreased lot coverage in other areas.

         Although Butterbaugh was a licensed architect, he was presented as a fact witness, rather than as an expert witness. Butterbaugh testified that he was contacted by a draftsman for the Browns to answer certain questions about their proposed construction project, but that he was never formally retained to work on the project. He was also contacted by Sandomire, and while they exchanged emails about the height restriction, in which Butterbaugh noted that Sandomire "had made a compelling case for his opinion," Butterbaugh "never came to a conclusion either way" as to whether the proposed construction complied with the Subdivision Documents. Butterbaugh's testimony was apparently offered to counter an assertion by the Plaintiffs that Butterbaugh had opined that he agreed with Johnson's opinion that the Browns' plans were not in compliance with the Subdivision Documents.

         The Circuit Court entered the Order on Counts II and III on August 12, 2016. In granting the relief to Plaintiffs, the Circuit Court included, inter alia, the following findings of fact (FOFs) and conclusions of law (COLs):

16. The Subdivision Documents expressly state the intent underlying the covenants and restrictions[:]
"to develop and maintain the general attractiveness of the subdivision, as seen from all public areas, to provide each lessee as much undisturbed view and unobstructed breeze as practicable, to promote esthetic standards for buildings and their relationship to each other, to public spaces and to the site [.]"
36. All experts agreed that [the height restriction] provision describes two methods for determining the height limit of a house in the Waialae-Iki View Lots. . . . All experts agreed on the interpretation of Method 2, but Plaintiffs' and Defendants' experts differed on the interpretation of Method 1.
37. All experts agreed that Method 2 applies" [f]or houses with setbacks greater than that required." In other words, Method Two applies to a house built narrower than required by the Subdivision Documents and the applicable ordinances, and is not as wide as it could be. All experts agreed that Method 2 describes a sloping plane that runs at a slope of 1 foot to 10 feet.
38. [Defendants] interpreted Method 1 as describing a horizontal plane that begins at 18 feet above the highest existing ground elevation at the building and extends horizontally.
39. Plaintiffs and their experts interpreted Method 1 as a sloping plane that runs parallel to the ground at a height of 18 feet at each existing ground elevation point at the building.
40. The court agrees with Plaintiffs' experts that [Defendants'] interpretation of Method 1 is unreasonable, contrary to the Subdivision Documents' expressed intent, and would render Method 2 meaningless.
41. Under Tusher's interpretation, Method 1 would always allow for a wider and taller house in comparison to Method 2. Under Tusher's Method 1, a house built to be as wide as it could be (i.e., using the minimum setbacks) would also be able to build up to 18 feet extending out in a horizontal plane from the highest point. On the other hand, a house built to be narrower than required (i.e., using greater tan minimum setbacks) would only be able to build ...

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