Monday, January 2, 2012

What if Fred and Barney lived in your HOA?

And what if Fred and Barney were goats? Fortunately for us, the Court of Appeals had occasion to address this burning issue recently in Steiner v. Windrow Estates HOA.
                                                                                                    
Mr. and Mrs. Steiner lived in Windrow Estates in southeast Mecklenburg County, and had as their beloved pets two “certified Nigerian Dwarf” goats named Fred and Barney. Of course, the CCRs prohibited “livestock”, as most do, although interestingly, they did allow horses as Windrow Estates is an equestrian community. The case turned on whether Fred and Barney were livestock, as the HOA contended, or household pets as the Steiners argued. The trial court had found in favor of the Steiners on summary judgment.

The drafter of these particular CCRs failed to define the word “livestock”. When that happens, courts typically look to determine the “ordinary meaning” of the word in question, which means they usually simply look it up in the dictionary. Here, the Court referred to Merriam-Webster’s Collegiate Dictionary and determined that “livestock” are “farm animals kept for use or profit” whereas pets are “domesticated animal[s] kept for pleasure rather than utility.”

The Court set forth excerpts from Mrs. Steiner’s affidavit in lengthy and sympathetic detail. Mrs. Steiner had been diagnosed with health problems and her physician recommended pets to speed her recovery. After some research, she determined that Nigerian Dwarf goats made excellent pets and could also live comfortably with the horses that the Steiners already kept on their property. The goats were bought from an outfit (Peach Tree Farms in nearby Oakboro) that sells them solely as pets, she said, and they were neutered and don’t produce milk or meat, so they could not be used for profit. Mrs. Steiner also testified that the goats were “affectionate, gentle, and make great companions.” (Apparently these particular goats don’t eat everything they see like the garden-variety goats I am familiar with – especially the one that once ate my uncle’s dentures. But that is another story.)

Dwarf Nigerian Goat from Peach Tree Farms' website.

Mrs. Steiner also testified that the goats lived outside in the stable with the horses, which to me seems more suggestive of livestock than household pets, but the Court somewhat facilely glossed over this issue by stating that household pets don’t necessarily have to live inside the house to be considered pets.

As often is the case when a court chooses to quote liberally from the one side’s testimony in its opinion, the Court of Appeals decided in favor of the sympathetic plaintiffs Mr. and Mrs. Steiner, holding that Fred and Barney were indeed pets and upholding the decision of the Superior Court. But the bigger question is, why did the Court decide the way it did and what, if anything, can we learn from this opinion? I see at least three takeaways for HOAs:

The first and most obvious takeaway is that it is critically important to define terms in CCRs. Obviously, had the CCRs clearly stated that goats were included in the term “livestock”, it would have helped the HOA’s case, but most likely this wouldn’t have changed the outcome, because it appears that the goats in this case were in fact pets.

Second, the plaintiffs in this case came across very sympathetically, and since judges are people too, this was an important part of why the decision ended up the way it did. HOAs facing litigation should very carefully consider the relative sympathies of the parties involved before incurring the expense of protracted litigation, even if they feel the legalities are on their side. Don’t miss the forest for the trees when deciding whether litigation is warranted.

Finally, it is crucially important for HOAs to be aware that North Carolina courts look upon all CCRs with a jaundiced eye. The Court of Appeals spent a good portion of its opinion harping on this particular doctrine, summarizing it as follows:

“The law looks with disfavor upon covenants restricting the free use of property. As a consequence, the law declares that nothing can be read into a restrictive covenant enlarging its meaning beyond what its language plainly and unmistakably imports.”

This gave the Court the legal support it was looking for to read the term “livestock” very restrictively (even though the careful reader will note that the Merriam-Webster definition states that livestock includes “farm animals”, and I can’t imagine anyone arguing that goats are not generally considered farm animals) and to find in favor of plaintiffs it clearly found to be worthy of its support, even on summary judgment. In addition, and perhaps I am just being paranoid here, this allowed the Court to hand the HOA community another in a fairly consistent string of losses at the North Carolina appellate level on facts that seemingly could have gone either way.

The case is Steiner v. Windrow Estates Home Owners Association, Inc., 713 S.E.2d 518 (July 19, 2011). Read the full text of the opinion here: http://appellate.nccourts.org/opinions/?c=2&pdf=MjAxMS8xMC04NjUtMS5wZGY=