Rick split up his land and
sold off lots with a covenant that
they'd only be used for single-family homes. He was only able to sell a
few lots, but West bought one and built a home.
Figuring he'd have more luck
selling the land to businesses, Rick attempted to have the area rezoned as
an industrial zone. A company trying to build a hospital was interested,
but West would not release the covenant. Rick sued in order to get the covenant declared unenforceable.
The Trial Court found for
West. Rick appealed.
The Trial Court found that
there had not been any substantial changes within the neighborhood nor
within Rick's unsold lots, so there was no reason to void the covenant.
The New York Supreme Court
affirmed.
The New York Supreme Court
acknowledged that the land would be a good location for a hospital, and
that a hospital would benefit the community.
However, the Court found
that if there is even a single member of a covenant that wants to enforce the covenant, then it is
still enforceable and protected by law.
West relied upon the covenant when deciding whether or not to buy the home,
so she had a right to continue to rely upon it (aka equitable
estoppel).
Rick unsuccessfully argued
that maybe he could just pay damages to West to get out of the covenant,
but the Court found that wasn't acceptable. That's similar to the idea in
contract law about specific performance.
Typically contract disputes
involving land are solved with specific performance. Monetary damages are usually not considered
sufficient.
Some States do allow
monetary damages under certain conditions.
If the Court did award
damages, how much should West receive? West would be entitled to the
diminished fair market value of her house. So, if it was worth $200k
before the hospital was built and only $120k afterwards, she would be
entitled to $80k. But is that fair? Rick offered her a lot of money to
sell and she didn't. There was probably some sentimental value that is
not quantifiable.
Plus, what happens if her
house's value increases? Does she get $0 in damages?
The city had another option if
they wanted a hospital. They could have simply used eminent domain and taken the land in question.
