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Atta v. Stephanie Fry, Inc.

Court of Appeals of Oregon

December 19, 2018

Kathryn VAN ATTA and David Van Atta, Husband and Wife, Plaintiffs-Appellants,
v.
STEPHANIE FRY, INC., an Oregon corporation, and River Valley Terrace, LLC, an Oregon limited liability company, Defendants-Respondents.

          Argued and submitted December 21, 2017

          Polk County Circuit Court 15CV22201 Norman R. Hill, Judge.

          William H. Sherlock argued the cause for appellants. Also on the briefs was Hutchinson Cox.

          Daniel S. Reynolds argued the cause for respondents. Also on the brief were Randall P. Sutton and Saalfeld Griggs PC.

          Before Lagesen, Presiding Judge, and DeVore, Judge, and James, Judge.

         Case Summary: Plaintiffs, owners of a home built in Phase One of a two-phase subdivision, appeal from a stipulated general judgment denying their motion for a preliminary injunction enjoining defendants, the developers, from proceeding with construction of an apartment complex in Phase Two of that subdivision, and instead ruling in favor of defendants and determining that the covenants, codes, and restrictions (CC&Rs) that prohibit such construction apply only to Phase One. Held: The CC&Rs are ambiguous as to which phase that they apply. The evidence in the record supports the trial court's factual fnding that the drafter intended the CC&Rs to apply only to Phase One.

         [295 Or.App. 466] LAGESEN, P. J.

         This is a case involving the application of covenants, codes, and restrictions (CC&Rs) to a Salem subdivision that was developed in two phases. At issue is whether those CC&Rs, which provide that "[t]his is a single family residential subdivision and no structures will be built over two stories in height," apply only to Phase One, which contains only single-family residences, or, instead, also apply to Phase Two, which contains a 60-unit, three-story apartment complex. Plaintiffs, who own a home built in Phase One of the subdivision, appeal from a stipulated general judgment[1] in favor of defendants, ruling that the CC&Rs apply only to that phase of the subdivision, and do not apply to the land contained in Phase Two of the subdivision. The question before us is whether the CC&Rs are ambiguous as to whether they apply to both phases of the subdivision, and, if so, whether the trial court's finding that the CC&Rs do not apply to Phase Two is supported by the evidence in the record. We conclude, as did the trial court, that the CC&Rs are ambiguous as to which phase they apply, and that the evidence supports the court's factual finding that the drafter intended them to apply only to Phase One.

         I. FACTS

         A. The River Valley Subdivision Approval Process

         The relevant facts are not disputed. Defendants, Stephanie Fry, Inc., and River Valley Terrace, LLC, are developers. In 2005, they acquired a 10.30-acre piece of property, located in Salem. That property was, and is, zoned RM-1 (Multiple Family Residential) under the Salem Area Comprehensive Plan.[2] Their plan was to develop the property [295 Or.App. 467] into a mixed-use residential community, called the River Valley Subdivision, in two phases.

         Because their plan did not comport with all of the requirements applicable to land zoned RM-1, defendants sought a land use variance from the City of Salem in Variance Case No. 05-5.[3] Their variance application stated that the purpose of the requested variance was "to allow a mixed residential development comprised of apartment units and individual single family lots." To accomplish that proposed mixed residential development, defendants requested that they be allowed to subdivide a portion of the property into lots smaller than the minimum lot size otherwise required under the RM-1 zoning requirements, with the intention that single family homes would be built on those lots. To ensure that the proposed development nonetheless complied with density requirements applicable in RM-1 zones, notwithstanding the fact that their proposal would result in the development of single family homes, defendants proposed building multifamily apartment units on Lot 39 of the development. Lot 39 is approximately 1.9 acres in size. Thus, as a whole, the proposed subdivision was to consist of 37 single family lots, one lot for a private roadway, and an apartment complex on Lot 39. The city approved the requested variance in October 2005. The approval order provided:

"Based on the Facts and Findings and materials submitted in the application, staff recommends that the Hearings Officer GRANT Variance Case No. 05-5 to reduce the minimum lot size required for lots subdivided after January 1, 1999 as required under [Salem Revised Code (SRC)] Chapter 148.240(c) to less than 20, 000 square feet, for property zoned RM-1 (Multiple Family Residential), approximately 11.68 acres in size, and located at 1740, 1760, and 1790 Wallace Road NW, subject to the following condition:
[295 Or.App. 468] "1. Prior to subdivision approval or development occurring on the property where no subdivision is proposed, provide evidence that the proposed development can conform to the applicable development standards of the code while maintaining an ...

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