Penny Creek Associates, LLC v. Fenwick Tarragon Apartments, LLC
Docket: No. 4293
Court: Court of Appeals of South Carolina; September 18, 2007; South Carolina; State Appellate Court
In a declaratory judgment action, Penny Creek Associates appeals a master-in-equity's summary judgment favoring Fenwick Tarragon Apartments and Trademark Properties regarding their conversion of apartments into condominiums. Penny Creek contends this conversion required their prior approval under existing covenants and restrictions. The court finds no error in the master’s decision. The facts establish that Penny Creek developed Fenwick Hall Plantation, where Fenwick Tarragon purchased land for an apartment complex in 2001, subject to specific covenants. These covenants mandated that any subdivision or boundary change required Penny Creek's written consent, which they could grant or withhold at their discretion. However, Penny Creek reserved the right to replat the property unless a sale contract was executed. In 2005, Fenwick Tarragon initiated a condominium conversion without seeking Penny Creek's approval, prompting Penny Creek to file a declaratory judgment action, claiming the conversion violated the covenants. Penny Creek also sought injunctive relief against further violations. In response, Fenwick Tarragon countered that the conversion did not constitute subdivision or boundary alteration, and a temporary injunction sought by Penny Creek was denied.
Fenwick Tarragon's motion for summary judgment was initially denied by the circuit court, prompting a request to expedite the hearing and subsequent consent to transfer the case to a master. Following hearings on June 22, 2006, the master granted summary judgment to Fenwick Tarragon, determining that its actions did not breach the covenants and restrictions nor constitute a subdivision of the property.
The standard for summary judgment indicates it is appropriate when no genuine issues of material fact exist, allowing a judgment as a matter of law. Disputes over inferences drawn from undisputed facts do not warrant summary judgment. The evidence must be viewed favorably towards the non-moving party.
Penny Creek contended that the master incorrectly ruled that converting apartments to condominiums did not require its consent, arguing that the covenants mandated prior approval for any subdivision, including condominiums. The master, however, interpreted the restrictive covenants, asserting that they were contractual and should be understood in their ordinary meaning. The law is generally cautious of restrictions on property use, requiring clear language for enforcement. The master concluded that the covenants explicitly pertained to land subdivision and did not restrict the owners' interest in property ownership. Moreover, since the covenants did not prohibit condominium use, Fenwick Tarragon was not obligated to obtain prior consent for the conversion. The master’s interpretation aligned with the intent of the covenants, which aimed to prevent alterations to property boundaries rather than ownership structure.
Written permission is required to alter boundary lines of property, specifically when combining lots or parcels into a larger one, as indicated by the definitions of 'lot' and 'parcel' in the covenants and restrictions. Penny Creek sought to control subdivisions that would change the size of building lots or parcels but did not retain the power to prevent the conversion of an approved apartment complex into a condominium complex. Penny Creek cites Harrington v. Blackston to argue that converting an apartment to a condominium constitutes a subdivision of property. However, despite the vacated status of Harrington, it is interpreted to mean that such conversion divides ownership interest but does not subdivide the land itself—owners of individual units hold shares in the property and common areas as tenants in common, without altering the property’s footprint. The argument against subdivision is supported by Baker v. Town of Sullivan’s Island, which states that converting to a condominium does not create separate lots. Penny Creek also references Houck v. Rivers, where the court described a property conversion to a condominium but clarified that the case's facts do not establish a precedent for subdivision. Thus, the ruling aligns with the understanding that converting apartments into condominiums divides ownership interest without constituting a subdivision of the land.
Penny Creek argues that a condominium conversion constitutes a subdivision of property, referencing Hoffman v. Cohen, where the court ruled against a landowner's proposal to build a condominium complex within a residential subdivision due to ambiguous covenants restricting use to single-family residences. The Hoffman court did not definitively address whether such a complex constituted a subdivision but noted its commercial nature conflicted with the residential restrictions. In contrast, the present case features clear and specific covenants allowing for multi-family residences, distinguishing it from Hoffman. The court concluded that converting an apartment building to condominiums is a division of ownership interest rather than a subdivision of land. It determined that the requirement for permission to subdivide applied solely to the land, not to converting an apartment complex into condominiums. Therefore, Fenwick Tarragon did not need Penny Creek's permission for the conversion. The master-in-equity's order granting summary judgment was affirmed. Additionally, while Fenwick Tarragon purported to seek permission from Penny Creek, it faced a demand for $1,300,000, although the record did not specify the exact amount requested. The covenants define 'lot' as any parcel designated for single-family dwelling use.
'Parcel' refers to any property, whether developed or undeveloped, that can be owned and transferred independently, as indicated on a recorded plat designated for construction of residential or commercial buildings. The court did not address whether a conversion reflects a change in approved use, but the master referenced section 3.01 of the covenants, which permits property use for apartments among other purposes. The master concluded that there was no change in use in this situation and noted that 'apartment' and 'condominium' are considered interchangeable under the Horizontal Property Regime Act. Citing Baker v. Town of Sullivan’s Island, the court established that converting an apartment building to condominiums is a change in ownership rather than a change in use. The argument by Penny Creek claiming the conversion violates neighborhood restrictions is dismissed, as it contradicts their prior approvals of both the original apartment plans and a subsequent condominium complex within the same area.
