Turudic v. Stephens - 176 Or. App. 175, 31 P.3d 465 (2001)

Rule:

To interpret a contractual provision, including a restrictive covenant, a court follows three steps. First, the court must examine the text of the disputed provision, in the context of the document as a whole. If the provision is clear, the analysis ends. If, however, the provision, when so viewed, remains ambiguous, the court must look to extrinsic evidence of the contracting parties' intent to resolve the ambiguity. Finally, if that analysis is not dispositive, the court must look to relevant maxims of construction, including the maxim that restrictive covenants should be construed most strictly against the covenant. 

Facts:

Plaintiffs Andy and Luisa Turudic are the owners of two American mountain lions, more commonly known as cougars. In 1993, the Turudics decided to move from Missouri to Oregon, in part because Oregon law, subject to certain statutory restrictions and local ordinances, permits the keeping of exotic animals such as cougars. Plaintiffs purchased property in Susan Estates, a small subdivision in rural Yamhill County.The Turudics obtained copies for two sets of the covenants, conditions, and restrictions ("CCRs"). The parties agree that the amended CCRs apply to the Turudics’ property and the issues regarding both the cougars and the holding pen. The Turudics began building their home in late spring 1994. Construction of the cougar holding pen, which meets or exceeds state standards for animal care and public safety and has been approved by the Oregon Department of Fish and Wildlife, began in mid-September and was completed on October 13, 1994. The Turudics did not obtain the approval of the Susan Estates Homeowners' Association board before undertaking or completing either their home or the cougar pen project. The Association wrote to the Turudics, expressing concerns both about the cougars and about plaintiffs' failure to seek Board approval for both their house and the cougar pen. The Turudics responded by offering to build a secondary safety fence around the existing cougar pen, and by submitting house plans to the Board. The Turudics did not submit plans for the cougar pen. On February 22, 1995, a representative for the Association wrote to the Turudics, stating that their house plans had been approved but that the cougar pen was rejected under the "nuisance provisions" of the CCRs. In March 1995, the Turudics brought this action. They sought a declaratory judgment that neither the pen nor the cougars could be prohibited under the amended CCRs and that, in all events, the Association was precluded from enforcing the CCRs because of the doctrine of laches. Plaintiffs further argued that the Association breached its obligations when it failed to follow the annual meeting provisions of the amended CCRs, failed to enforce the nuisance provisions as to other lot owners, and acted unreasonably and capriciously in denying approval for the cougar pen. Defendants counterclaimed, alleging that the cougars were a nuisance under both the CCRs and common law. Defendants also filed two claims for injunctive relief--one requiring plaintiffs to remove the cougar pen because they had failed to obtain approval for the structure as required by the CCRs, and the other precluding plaintiffs from keeping cougars on their property. The court found that the keeping of the cougars was not a nuisance, the cougars were not a permitted use under the covenants, and the construction of the pen without approval of the Board violated the covenants. The Turudics appealed.

Issue:

Did the Turudics’ keeping of two pet cougars on their property violate the CCRs of the subdivision?

Answer:

No

Conclusion:

The Court of Appeals held that the keeping of cougars was a permitted use. It found that the cougars were pets and that keeping family pets was a residential activity. The Turudics offered uncontradicted testimony that they kept and cared for the cougars as pets and not for any commercial purpose, such as breeding or exhibiting the animals for pay; thus, given that the cougars were family pets, and that their presence did not present a nuisance, the maintenance of the cougars constituted a residential use within the meaning of the covenants. Additionally, the pen was lawful. The Appellate Court found that the sole basis of the board's denial of approval for the pen was its belief that maintenance of the cougars was a nuisance; because that was the board's sole reason for denial, the preapproval process could not used as a subterfuge to preclude that permitted use, and such a denial was unreasonable and capricious.