BURKE v. ROLLE (2019)

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and shall not be cited and does not serve as precedent. Its case title, cause number, and disposition shall be included in this Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports.

¶2 Timothy F. Burke, Kimberly A. Burke, Jason C. Olsen, Melissa W. Olsen, Christopher Price, and Shalayne Price (“Homeowners”) challenge a Fourth Judicial District Court order refusing to preliminarily enjoin James E. Rolle and Elizabeth Rolle from operating a community residential facility on their property.

¶3 The Rolles and Homeowners own homes in a Missoula subdivision that is subject to restrictive covenants. The restrictive covenants provide that the properties shall be used strictly for residential purposes, and no business may be conducted on the properties. The Rolles intend to operate a community residential facility for aging adults in the residence they own. Homeowners filed a complaint alleging that the Rolles' intended use of their property violated the restrictive covenants. Homeowners sought a preliminary injunction pursuant to § 27-19-201(1) or (2), MCA, to restrain the Rolles from further developing the property or operating the facility during the pendency of the litigation. The District Court denied the preliminary injunction, reasoning that it could not conclude as a matter of law that Homeowners were entitled to a preliminary injunction because the merits needed to be determined in further proceedings. The court also found that the evidence did not support a finding or conclusion of irreparable harm to Homeowners during the pendency of the litigation.

¶4 For an injunction to issue under § 27-19-201(1), MCA, the applicant must show: (1) that he has a legitimate cause of action; (2) that he is likely to succeed on the merits; and (3) that an injunction is an appropriate remedy. Sandrock v. DeTienne, 2010 MT 237, ¶ 16, 358 Mont. 175, 243 P.3d 1123. A preliminary injunction may issue under § 27-19-201(2), MCA, when it appears that the commission or continuance of some act during the litigation would produce a great or irreparable injury to the applicant. Caldwell v. Sabo, 2013 MT 240, ¶ 29, 371 Mont. 328, 308 P.3d 81.

¶5 We will not disturb a district court’s decision to grant or deny a preliminary injunction unless the appellant demonstrates a manifest abuse of discretion. Doe v. Cmty. Med. Ctr., Inc., 2009 MT 395, ¶ 14, 353 Mont. 378, 221 P.3d 651. “A manifest abuse of discretion is an ‘obvious, evident, or unmistakable’ abuse of discretion.” Davis v. Westphal, 2017 MT 276, ¶ 10, 389 Mont. 251, 405 P.3d 73 (internal citation omitted). A preliminary injunction does not resolve the merits of the case. Sandrock, ¶ 13. When determining whether to grant or deny a preliminary injunction, findings and conclusions regarding the resolution of the ultimate issues must be reserved for trial on the merits. Benefis Healthcare v. Great Falls Clinic, LLP, 2006 MT 254, ¶ 19, 334 Mont. 86, 146 P.3d 714.

¶6 Homeowners argue that the District Court erred in denying a preliminary injunction under § 27-19-201(1), MCA, because they are seeking to enjoin the Rolles' commercial use of their property and it appears that Homeowners are entitled to the relief demanded. Homeowners argue further that the District Court erred in denying a preliminary injunction under § 27-19-201(2), MCA, because the Rolles' continuing invasion of the Homeowners' property rights constitutes an irreparable injury that warrants injunctive relief. “Without wading into the ultimate issues reserved for determination through further proceedings,” the District Court concluded that it could not rule as a matter of law that Homeowners were entitled to a preliminary injunction. The District Court concluded further that the evidence did not support a finding of irreparable harm. It reasoned that the residential appearance of the Rolles' house had been preserved and the possible harms were speculative because the facility was not yet operating.

¶7 The parties and amicus devote considerable briefing to the interpretation of the covenants and whether precluding the Rolles' intended use of the property would violate the federal Fair Housing Act and Fair Housing Amendments Act, 42 U.S.C. § 3601, et seq. The latter issue was not considered in the District Court’s preliminary injunction analysis. We decline to opine on the merits of that issue at this stage of the proceedings, but conclude nonetheless that the court did not manifestly abuse its discretion in denying a preliminary injunction under § 27-19-201(1) or (2), MCA. See Sandrock, ¶ 13 (noting that the Court’s analysis on appeal of a preliminary injunction ruling “ ‘is not intended to express and does not express any opinion about the ultimate merits’ of the underlying case” (quoting Benefis Healthcare, ¶ 19) ). We cannot conclude that the District Court abused its discretion in a way that was “obvious, evident, or unmistakable.” Davis, ¶ 10.

¶8 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our Internal Operating Rules, which provides for memorandum opinions. In the opinion of the Court, the case presents a question controlled by settled law or by the clear application of applicable standards of review. The District Court’s ruling was not a manifest abuse of discretion. We affirm its denial of the requested preliminary injunction.

¶9 I believe the District Court made incorrect conclusions based upon the evidence presented and the findings of fact it entered on Plaintiffs' request for a preliminary injunction.

¶10 As the District Court correctly noted, citing Yockey v. Kearns Props. LLC, 2005 MT 27, 326 Mont. 28, 106 P.3d 1185, at this stage of the proceeding, it is not the province of the court to determine or anticipate the ultimate outcome of the issues on the merits, but should merely decide whether a sufficient case has been made to preserve the status quo until trial. “The limited function of a preliminary injunction is to preserve the status quo and to minimize the harm to all parties pending full trial.” Yockey, ¶ 18 (emphasis added). Further, as the Court notes, the issue of the application of the federal Fair Housing Act has not yet been made an issue before the District Court.

¶11 The District Court found that Defendants were the owners of a for-profit corporation, had applied for a commercial license, and had acquired property lying within the “tightly clustered” homes, including Plaintiffs' home, which are governed by a restrictive covenant that prohibits commercial activity. Defendants' property lies “immediately adjacent” to the driveway accessing the Plaintiffs' home. Defendants acknowledge, and the District Court found, that they purchased the property for commercial purposes, that they are developing the residence on the property for commercial purposes, and that they did so without first checking into the restrictions imposed by the covenants, which prohibit commercial enterprises.

¶12 The District Court’s denial is based on its reasoning that, while commercial modification of the Defendants' property is ongoing, “it has been limited to the interior of the home,” making Plaintiffs' claims “speculative because the facility has not opened and the potential impacts are unknown.” This is both contrary to the evidence and to common sense. First, the evidence is, and the District Court found, that the fuller impacts of the commercial development of the property are entirely predictable and will occur. Defendants will employ 5.2 full time employees who will provide 24-hour care to an estimated 11 residents. Traffic, including for commercial deliveries, will increase significantly in a tight residential area where 10 children reside, and where current parking is insufficient. An expert witness from the State of Montana testified that, even though he supports the mission of assisted living facilities, they will certainly increase traffic, tax parking, and “impact neighborhoods.” Another expert opined that the impacts would include a negative impact upon the marketability and value of Plaintiffs' properties. These are all substantially certain, exterior impacts, which are occurring, and will occur, in spite of the residential covenant facially prohibiting commercial activity.

¶13 Based upon the District Court’s findings of fact, I would conclude that its ultimate conclusions, including that the impacts of the commercial development are speculative, and are limited to the interior of the Defendants' home, are incorrect. The District Court correctly acknowledged that Plaintiffs have raised “serious questions” and have stated a “legitimate cause of action.” The Defendants' commercial development is an affront to a facially applicable restrictive covenant, and I believe the District Court should have entered a preliminary injunction “to preserve the status quo and to minimize the harm to all parties” pending resolution of legal issues concerning the validity of the covenants. Yockey, ¶ 18.

Justice Beth Baker delivered the Opinion of the Court.

We Concur: JAMES JEREMIAH SHEA, J. LAURIE McKINNON, J. DIRK M. SANDEFUR, J.