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Vera Lee Angel Revocable Trust v. Jim O'Bryant and Kay O'Bryant Joint Revocable Trust

Supreme Court of Arkansas

February 8, 2018

VERA LEE ANGEL REVOCABLE TRUST, JOHNNY ANGEL, AND PAULA NAPPER APPELLANTS
v.
JIM O'BRYANT AND KAY O'BRYANT JOINT REVOCABLE TRUST, JOHN W. WHITTAKER, SUSAN C. WHITTAKER, JOHN STANSEL HARVEY, LISA HARVEY, ERNEST BERNARD MCCOOL TRUST, GREGORY D. HAWKINS, SHARON L. HAWKINS, JIMMIE EARL O'BRYANT, BARBARA O'BRYANT, GLEN DALE PERCIFUL, TERESA M. PERCIFUL, ROBERT LOUIS GLADFELTER REVOCABLE TRUST, AND JEANNE M. MCFARLIN LIVING TRUST APPELLEES

         APPEAL FROM THE GARLAND COUNTY CIRCUIT COURT [NO. 26CV-16-304] HONORABLE THOMAS LYNN WILLIAMS, JUDGE

          Legacy Law Group, by: Philip B. Montgomery, for appellant.

          D. Scott Hickam, for appellees.

          JOSEPHINE LINKER HART, Justice

         The Vera Lee Angel Revocable Trust, through trustees Johnny Angel and Paula Napper (Angel) appeal from an order of the Garland County Circuit Court permanently enjoining them from using for short-term rentals a house situated on a lot in the Jeffries and Norvell Subdivision. On appeal, Angel argues that the circuit court's rulings were clearly erroneous. We reverse and dismiss.

         The facts in this case are not in dispute. The house in question is a fully furnished 5000-square-foot structure that sits on a 6.07-acre lot located in the Jeffries and Norvell Subdivision in Garland County. The 26-acre subdivision, which is adjacent to Lake Hamilton, was platted in 1953. In pertinent part, the subdivision's bill of assurance states:

None of the lots shall be improved, used or occupied for other than residence purposes and specifically none of the lots shall be used for any commercial purpose, including motels, tourist courts, motor hotels, hotels, garage apartments, apartments, etc. and no commercial boat landings, docks or facilities of any kind for commercial and fishing boats for hire, shall be erected on or attached to said lots and no stores shall be erected thereon.

In 2006, a restriction on condominiums was added.

         Initially the house was the home of John Angel's and Paula Napper's mother and father. Later, it was placed in a trust. For a time, John Angel and his wife also lived in the house, but thereafter, the house was vacant. According to Angel, he subsequently allowed friends and neighbors to "use" the house on a "short-term basis, " but he denied offering the house for rent before 2015.

         Angel decided to list the property on VRBO.COM. VRBO is the acronym for "Vacation Rentals By Owner." VRBO.COM connects private individuals with vacationers seeking short-term rentals of properties located in resort areas. Appellees attached to their complaint a copy of Angel's VRBO.COM posting, which stated that the rental rate for the property was $329 per night, with a two-night-minimum stay required.

         On March 23, 2016, appellees, who are the other landowners in the Jeffries and Norvell Subdivision, filed a complaint seeking to enjoin Angel from "offering the premises to those who do not reside there, from carrying on a commercial business, from engaging in short-term rentals, and from similar activities that constitute a nuisance[1] to the Plaintiffs." Angel answered the appellees' complaint and counterclaimed for declaratory judgment, asking the circuit court to find that "there were no restriction[s] on rentals and that short-term rentals are not prohibited by the covenants contained within the Bill of Assurance."

         After a hearing in which several of the property owners in the subdivision[2] testified, primarily on the issue of whether short-term rentals affected the enjoyment of their property, the circuit court granted a preliminary injunction. The circuit court reasoned that Dunn v. Aamodt, 695 F.3d 797 (8th Cir. 2012) is "controlling;"[3] the bill of assurance for the subdivision in which the house is located is not ambiguous; using the property for short-term rentals violated the covenants found in the bill of assurance; and continued violation of the bill of assurance will cause the other residents of the subdivision irreparable harm. Angel filed a notice of appeal. However, by joint motion, the parties asked the circuit court to make the injunction permanent. The circuit court granted this request, finding that the bill of assurance was not ambiguous; Angel's use of the property "for overnight and weekly rentals is in violation of the Jeffries and Norvell Subdivision Bill of Assurance"; and the property had been used for "other than residential purposes and has been used for a commercial purpose." The circuit court ordered that Angel "refrain from renting the subject property." The circuit court also dismissed Angel's counterclaim. Angel again timely filed a notice of appeal.

         On appeal, Angel argues that the circuit court clearly erred for several reasons. First, he contends that the circuit court's construction of the bill of assurance was erroneous because it did not strictly construe the instrument in favor of unfettered use of the land. Angel asserts that the restrictions in the bill of assurance are not "clearly apparent." In this vein, he first challenges the finding that his use of the property was "commercial."

         Angel argues that the language in the bill of assurance makes "no reference whatsoever to rentals." While he acknowledges that the plain language proscribes "commercial structures such as motels, hotels and tourist courts, " he notes that one of the appellees "admitted" that the house "did not appear to be a hotel in the traditional sense." Furthermore, he asserts that while it was "obvious" that the developer intended to restrict commercial venues such as motels and hotels, stores, and marinas, the ...


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