Fong v. Hashimoto

Hawaii Supreme Court
994 P.2d 500, 92 Haw. 568 (2000)

ELI5:

Rule of Law:

A restrictive covenant limiting a structure to 'one-story in height' is too ambiguous to be legally enforceable. Furthermore, a common grantor who holds only bare legal title to a parcel under an agreement of sale lacks a sufficient property interest to impose a restrictive covenant on another parcel for the benefit of the first.

Facts:

Edward Fogarty created the Fogarty Subdivision, consisting of fifteen lots.
On March 27, 1940, Fogarty entered an unrecorded agreement of sale for Lot 4 (the future Junior Fongs' lot) with the Austins; the deed contained no height restriction.
On April 4, 1940, Fogarty executed a deed conveying Lot 5 (the future Senior Fongs' lot) to the Howells, which also contained no height restriction.
On April 5, 1941, Fogarty agreed to sell Lot 11 (the future Hashimotos' lot) to the De Canios via an unrecorded agreement of sale.
On June 26, 1943, Fogarty's administrators conveyed Lot 11 to the De Canios via a recorded deed that contained a restrictive covenant limiting any structure to 'one (1) story in height' and stated this covenant would run with the land.
The deed for Lot 11 did not specify which other lots in the subdivision were intended to benefit from the height restriction; only two other lots out of the fifteen in the subdivision had a similar restriction.
The Fongs eventually acquired title to the upslope Lots 4 and 5, and the Hashimotos acquired title to the downslope Lot 11.
In January 1995, the Hashimotos began construction of a two-story home on Lot 11, which would interfere with the view from the Fongs' properties.

Procedural Posture:

The Senior Fongs sued the Hashimotos in circuit court (trial court) seeking to enjoin the construction of their home.
The circuit court issued a temporary restraining order (TRO) halting construction.
The Junior Fongs successfully filed a motion to intervene in the lawsuit.
Following a bench trial, the circuit court entered a directed verdict for the Hashimotos, dissolved the TRO, and entered final judgment in their favor.
The Fongs (appellants) appealed the decision to the Intermediate Court of Appeals (ICA).
The ICA vacated the circuit court's judgment, holding that the restrictive covenant was enforceable, and remanded the case.
The Hashimotos (petitioners) then successfully petitioned the Supreme Court of Hawai'i for a writ of certiorari.

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Issue:

Does a restrictive covenant in a deed limiting a structure to 'one-story in height' create an enforceable right for neighboring landowners to prevent the construction of a two-story house, where the common grantor had already conveyed the neighbors' lots or held only bare legal title to them at the time the restriction was imposed?

Opinions:

Majority - Klein, J.

No, the restrictive covenant is unenforceable. Citing the recent precedent of Hiner v. Hoffman, the court first holds that a deed restriction phrased as 'one-story in height' is inherently ambiguous and therefore legally unenforceable. Second, the court finds no evidence of a 'common scheme or plan' that would support an equitable servitude, as only three of the fifteen lots in the subdivision contained the height restriction, demonstrating a lack of uniformity. Finally, a legally enforceable restrictive covenant was never created because the common grantor, Fogarty, did not have a sufficient property interest in the Fongs' lots when he burdened Lot 11. Fogarty had already conveyed Lot 5 outright and retained only bare legal title to Lot 4 under an agreement of sale, which is merely a security interest for payment and is insufficient to empower a grantor to create a real property benefit for that lot.

Concurring-in-part-and-dissenting-in-part - Nakayama, J.

No, the restriction is unenforceable, but not because the language is ambiguous. The author concurs with the majority's conclusion that the covenant is unenforceable because there was no common scheme and, more importantly, because the common grantor, Fogarty, lacked the requisite property interest in Lots 4 and 5 to create a covenant for their benefit when he burdened Lot 11. However, the author dissents from the majority's primary holding that the term 'one-story in height' is ambiguous, referencing his dissent in the Hiner case and noting that the defendants only raised the ambiguity argument late in the appeal after Hiner was decided.

Analysis:

This decision significantly impacts property law in Hawaii by establishing that common, non-specific height restrictions like 'one-story' are presumptively unenforceable due to ambiguity. It forces drafters of covenants to use precise, objective measurements to ensure enforceability. The ruling also clarifies the doctrine of restrictive covenants, holding that a grantor's interest as a vendor under an agreement of sale (retaining only 'bare legal title') is insufficient to create a benefit for that land when burdening another parcel, thus reinforcing the requirement that a grantor must have a substantial, existing property interest in the dominant estate at the time of the covenant's creation.

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