April 08, 2011 – Agua Fria Save the Open Space Association v. James C. Rowe, No. 29,402

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: April 8, 2011

NO. 29,402

AGUA FRIA SAVE THE OPEN
SPACE ASSOCIATION, an

unincorporated association,
Plaintiff-A ppellant,

V.

JAMES C. ROWE,
Defendant- A ppellee.

APPEAL FROM THE DISTRICT COURT OF LINCOLN COUNTY
Jerry H. Ritter, Jr., District J udge

Alex Chisholm
Albuquerque, NM

for Appellant

Adam D. Rafkin, P.C.
Adam D. Rafkin
Ruidoso, NM

for Appellee

OPINION
VIGIL, Judge.
{1} 	Agua Fria Save the Open Space Association (Plaintiff) filed an action for
injunctive relief seeking to prevent James Rowe (Defendant) from developing
residential townhomes in an area of open space known as the Country Club Tract.
The district court granted partial summary judgment in favor of Defendant,
concluding that Defendant successfully had extinguished the restrictive covenants on
the property. Plaintiff appeals, claiming that (1) Defendant is barred from developing
the Country Club Tract, pursuant to Ute Park Summer Homes Association v. Maxwell
Land Grant Co., 77 N.M. 730, 427 P.2d 249 (1967); Cree Meadows, Inc. (NSL) v.
Palmer, 68 N.M. 479, 362 P.2d 1007 (1961); and Knight v. City of Albuquerque, 110
N.M. 265, 794 P.2d 739 (Ct. App. 1990), and (2) the Saving Clause, which provides
for the extinguishment of the restrictive covenants on any block or tract within the
Agua Fria Subdivision, does not apply to the Country Club Tract. We conclude that
genuine issues of material fact exist regarding Defendant’s authority to extinguish the
restrictive covenants on the Country Club Tract. 	Accordingly, we reverse the
judgment of the district court and remand for further proceedings.

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I. 	BACKGROUND
{2} 	The Country Club Tract is composed of 7.23 acres of open space located in the
Agua Fria Subdivision in Lincoln County, New Mexico. The Agua Fria Subdivision
is subject to a plat and restrictive covenants recorded with the Lincoln County Clerk
by the original developers, Bruce and Georgia Griffith, on July 7, 1954.
{3} 	Section 3(B) of the restrictive covenants provides as follows:
The Country Club Tract may be used for a hotel and/or club house
and commercial activities for profit, which generally accompany such
establishments, such as restaurants, bars, rooms and halls for dancing,
tennis courts, swimming pools, fishing, boating[,] and other athletic
events and activities operated in connection with such hotel or club
house only.
{4} 	Section 4(b) of the Saving Clause states:
All of the covenants [herein] shall run with the ownership of the
above described property and shall be binding on the undersigned parties
and all persons claiming under them until December 31, 1995, at which
time said covenants shall be automatically extended for periods of ten
years unless by vote of a majority in number of the then owners of lots
and tracts within the exterior boundaries of the land described in Section
1-Blanket Restrictions, hereof, it is agreed to change the said covenants
in whole or in part.
Provided, however, that at any time hereafter any of said
covenants or restrictions, in whole or in part, except the Blanket
Restrictions in Section 1 hereof, may be alleviated, [amended], released
or extinguished as to any block or tract by written instrument duly
executed, acknowledged and recorded by three-fourths of the owners of
said block or tract voting according to front foot holding, each front foot
counting as one vote, and provided further that the undersigned now own

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land within the aforesaid boundaries or in close proximity thereto, and
that these covenants are a general plan for the benefit of all and any of
said land, and consequently that if said restrictions are alleviated or
released as aforesaid at any time within ten years from the date hereof,
and if at such time Bruce Griffith and Georgia . . . Griffith, or either of
them, own any land within the aforesaid boundaries, then in addition to
the aforesaid vote of property owners, it shall also be necessary to obtain
the consent thereto of the undersigned.
{5} 	Sue Davis, the daughter of Bruce and Georgia Griffith, inherited the Country
Club Tract and transferred ownership to the V.R. Davis and Sue G. Davis Trust (the
Trust). On November 30, 2004, the Trust granted Defendant the exclusive option to
purchase and develop into townhomes “any or all of the 54 lots” situated on the
Country Club Tract. Defendant exercised the option and proposed to build a fifty-two
lot development entitled “Escondido Hills, A Subdivision of the Country Club Tract,
Agua Fria Subdivision[.]”
{6} 	Plaintiff, an unincorporated association of homeowners in the Agua Fria
Subdivision, filed a complaint in district court seeking to enforce the restrictive
covenants and enjoin Defendant from developing the Country Club Tract. Defendant
moved for summary judgment, arguing that “[n]othing in the Restrictive Covenants
prohibits the building of single family residences in the Country Club [T]ract.” The
district court denied the motion because “genuine issue[s] of material facts exist[ed].”

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{7} 	On February 21, 2006, Defendant exercised his right under the Saving Clause
to extinguish, alleviate, and release all restrictive covenants, except for the Blanket
Restrictions, on the Country Club Tract. Approximately one month later, Plaintiff
filed an “Amendment to Restrictive Covenants,” which was adopted by a majority of
the homeowners in the Agua Fria Subdivision. The amendment provided that “[t]he
Country Club Tract shall remain permanently undeveloped and an open space park,
as it has for the last . . . 51 years, for the benefit of Agua Fria owners.”
{8} 	Thereafter, Defendant moved for reconsideration of his motion for summary
judgment based on new circumstances, namely, the extinguishment of the restrictive
covenants. 	The district court granted Defendant’s motion “to the extent that the
Restrictive Covenants have been properly extinguished by Defendant as to the
Country Club Tract.” Thus, Plaintiff was “foreclosed from relying on the Restrictive
Covenants, other than [the Blanket Restrictions] at the trial.” However, the district
court allowed Plaintiff to present evidence of the “oral misrepresentations allegedly
made by the developer to support its argument that the Country Club Tract was meant
to remain an ‘open space.’”
{9} 	The issue of whether the homeowners in the Agua Fria Subdivision had been
induced to purchase their lots based on the developer’s representations that the
Country Club Tract “would always remain open space” was tried to the jury. The jury

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found in favor of Defendant and the district court rendered judgment accordingly. On
appeal, Plaintiff does not challenge the jury verdict but, rather, argues that the district
court improperly held as a matter of law that Defendant had extinguished the
restrictive covenants on the Country Club Tract.
II. 	DISCUSSION
{10} 	“When reviewing a trial court’s grant of summary judgment, we view the facts
in the light most favorable to the party opposing summary judgment, drawing all
inferences in favor of that party.” Gormley v. Coca-Cola Enters., 2005-NMSC-003,
¶ 8, 137 N.M. 192, 109 P.3d 280 (internal quotation marks and citation omitted).
“Summary judgment is appropriate where there are no genuine issues of material fact
and the movant is entitled to judgment as a matter of law.” Romero v. Philip Morris,
Inc., 2010-NMSC-035, ¶ 7, 148 N.M. 713, 242 P.3d 280 (internal quotation marks and
citation omitted). “We review these legal questions de novo.” Self v. United Parcel
Serv., Inc., 1998-NMSC-046, ¶ 6, 126 N.M. 396, 970 P.2d 582.
A. 	Whether the Homeowners Acquired an Easement to the Open Space in the
Country Club Tract
{11} 	Plaintiff claims that Defendant is barred from developing the Country Club
Tract, pursuant to Ute Park, Cree Meadows, and Knight, which hold that “a developer
[is not] allowed to induce purchasers to buy property by purporting to include open

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space such as parks or golf courses in a subdivision plat, only to subsequently change
the uses of those open space areas.” 	Knight, 110 N.M. at 266, 794 P.2d at 740.
Defendant responds that there is “no . . . evidence in the case at bar” to establish that
“the Country Club [T]ract was intended to always remain an ‘open space.’”
{12} 	“[W]here land is sold with reference to a map or plat showing a park or like
open area, the purchaser acquires a private right, generally referred to as an easement,
that such area shall be used in the manner designated.” Ute Park, 77 N.M. at 735, 427
P.2d at 253; see Cree Meadows, 68 N.M. at 482, 362 P.2d at 1009, (holding that open
space could not be developed where the trial court found that “the defendants had sold
lots to purchasers in some of the subdivisions by references to the then-existing plat
and the restrictive covenants and that some persons had purchased lots at higher prices
than ordinarily would have been paid after having examined the plat, the covenants,
and heard the representations of the owners or their agents”).
The rationale of the rule is that a grantor, who induces purchasers,
by use of a plat, to believe that streets, squares, courts, parks, or other
open areas shown on the plat will be kept open for their use and benefit,
and the purchasers have acted upon such inducement, is required by
common honesty to do that which he represented he would do. It is the
use made of the plat in inducing the purchasers, which gives rise to the
legally enforceable right in the individual purchasers, and such is not
dependent upon a dedication to public use, or upon the filing or
recording of the plat.

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Ute Park, 77 N.M. at 735, 427 P.2d at 253. “The private rights created when buyers
purchased their lots with reference to the plat are superior to the developer’s attempt
to reserve the power to alter the use of the areas delineated on the plat” as open space.
Knight, 110 N.M. at 266, 794 P.2d at 740 (affirming summary judgment where it was
undisputed that the original developers had used an area of open space as a selling tool
to induce purchasers to buy land).
{13} 	The factual issue of whether the original developer, Bruce and Georgia
Griffith, had induced homeowners to purchase lots in the Agua Fria Subdivision based
on the representation of open space in the Country Club Tract was tried to the jury.
The jury found, by special interrogatory, that the original developer “of the Agua Fria
Subdivision [had not] represent[ed] to one or more of [the] buyers of lots in the
subdivision that the Country Club Tract would remain an open space for the use of all
of the owners of lots in the subdivision.” In the absence of such a representation, the
homeowners in the subdivision did not acquire an implied grant, covenant, or
easement to the Country Club Tract enforceable against Defendant. 	Accordingly,
Plaintiff’s reliance on Ute Park, Cree Meadows, and Knight is misplaced.
B. 	Whether Defendant Extinguished the Restrictive Covenants
{14} 	We next address whether Defendant successfully extinguished the restrictive
covenants on the Country Club Tract. 	Plaintiff claims that the extinguishment

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provision in the Saving Clause plainly and unambiguously does not apply to the
Country Club Tract. Defendant responds that the Saving Clause explicitly provides
for the extinguishment of the restrictive covenants on all blocks or tracts within the
Agua Fria Subdivision, including the Country Club Tract.
{15} 	Whether the language of a restrictive covenant is ambiguous is a question of
law. Jones v. Schoellkopf, 2005-NMCA-124, ¶ 8, 138 N.M. 477, 122 P.3d 844. The
bare fact that two parties argue for different interpretations of a provision “does not
create ambiguity . . . instead ambiguity is only created when provisions are reasonably
and fairly susceptible to two constructions.” Id. ¶ 12.
{16} 	“Restrictive covenants must be considered reasonably, though strictly, and an
illogical, unnatural, or strained construction must be avoided.” Montoya v. Barreras,
81 N.M. 749, 750, 473 P.2d 363, 364 (1970). “[W]e will not read restrictions on the
use and enjoyment of the land into the covenant by implication” and “we must give
words in the restrictive covenant their ordinary and intended meaning.” Hill v. Cmty.
of Damien of Molokai, 1996-NMSC-008, ¶ 6, 121 N.M. 353, 911 P.2d 861. 	“In
construing a protective covenant, a court is to give effect to the intention of the parties
as shown by the language of the whole instrument, considered with the circumstances
surrounding the transaction, and the object of the parties in making the restrictions.”
Hines Corp. v. City of Albuquerque, 95 N.M. 311, 313, 621 P.2d 1116, 1118 (1980).

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{17} 	The Saving Clause provides, in relevant part, that “three fourths of the owners”
of “said block or tract” may alleviate, amend, release, or extinguish any of the
restrictive covenants, except the Blanket Restrictions, by “voting according to front
foot holding, each front foot counting as one vote[.]” The Country Club Tract plainly
is a “block or tract” of land in the Agua Fria Subdivision and, therefore, it appears that
the restrictive covenants are subject to extinguishment. See Cree Meadows, 68 N.M.
at 483, 362 P.2d at 1010 (construing similar language and holding that “the
extinguishment provision has no application to the ‘golf course,’ although it does to
the ‘Country Club Tract’”). 	At the same time, however, the plain language of the
Saving Clause seems to contemplate a subdivided block or tract, one with multiple
separate lot owners each voting according to front foot holding. Because the Country
Club Tract was not subdivided at the time the restrictive covenants were recorded, nor
subject to multiple separate ownership, the applicability of this provision is thrown
into doubt. 	Under these circumstances, we conclude that the Saving Clause is
ambiguous as applied to the Country Club Tract.
{18} 	In light of this ambiguity, we must determine whether partial summary
judgment was properly granted. 	The Supreme Court has held that ambiguous or
unclear language in a restrictive covenant must be resolved “in favor of the free
enjoyment of the property and against restrictions.” 	Hill, 1996-NMSC-008, ¶ 6

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(holding that “[t]his rule of construction . . . militates in favor of a conclusion that the
term ‘family’ encompasses a broader group than just related individuals and against
restricting the use of the property solely to a traditional nuclear family”). 	Id. ¶ 13.
Pursuant to this line of authority, it appears that the district court properly construed
the Saving Clause in favor of Defendant as a matter of law. 	At the same time,
however, the Supreme Court has instructed that the rule of strict construction must be
subordinate to the intention of the parties as reflected by the language of the whole
instrument, the circumstances surrounding the transaction, and the purposes animating
the restrictions. Montoya, 81 N.M. at 751, 473 P.2d at 365 (holding that, although the
restrictive covenants “may be changed in whole or in part, the change or changes
which might be made must affect all of the described property” given the drafter’s
plain intent to provide for “a detailed plan for residential development”); see Sharts
v. Walters, 107 N.M. 414, 419-20, 759 P.2d 201, 205-06 (Ct. App. 1988) (“Although
we recognize the general rule that ambiguities concerning restrictive covenants should
be resolved in favor of the free enjoyment of the property and against restrictions, this
rule cannot be applied to defeat the obvious purpose of the restrictions. The intent of
the parties and object of the restrictions govern.”) (citations omitted). Pursuant to this
line of authority, it appears that summary judgment was improper because genuine
issues of material fact existed regarding the drafter’s intent vis-á-vis the Country Club

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Tract. To resolve the issue on appeal, we must reconcile these two conflicting lines
of authority.
{19} 	Restrictive covenants “constitute a contract between the subdivision’s property
owners as a whole and the individual lot owners,” based on the consideration “given
and relied upon in the conveyance of land.” 	Aragon v. Brown, 2003-NMCA-
126, ¶ 11, 134 N.M. 459, 78 P.3d 913 (alteration omitted) (internal quotation marks
and citations omitted). Although created by contract, restrictive covenants constitute
valuable “property rights which run with the land.” 	Montoya, 81 N.M. at 751, 473
P.2d at 365; see Leigh v. Vill. of Los Lunas, 2005-NMCA-025, ¶ 11, 137 N.M. 119,
108 P.3d 525 (“[R]estrictive covenants are deemed property interests in New
Mexico.”). Historically, “restrictive covenants have been used to assure uniformity
of development and use of a residential area to give the owners of lots within such an
area some degree of environmental stability.” Montoya, 81 N.M. at 751, 473 P.2d at
365. 	Given their “contractual . . . nature[,]” Aragon, 2003-NMCA-126, ¶ 11,
however, the construction of restrictive covenants is governed by principles of
contract law. 	See Heltman v. Catanach, 2010-NMCA-016, ¶ 6, 148 N.M. 67, 229
P.3d 1239 (holding that the termination of a restrictive covenant “by release or
agreement is based on fundamental principles of contract law” (internal quotation
marks and citation omitted)), cert. denied, 2010-NMCERT-001, 147 N.M. 673, 227

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P.3d 1055; cf. City of Rio Rancho v. AMREP Sw., Inc., 2010-NMCA-075, ¶¶ 17-18,
148 N.M. 542, 238 P.3d 911 (applying contract law to the construction of a deed and
plat), cert. granted, 2010-NMCERT-008, 148 N.M. 943, 242 P.3d 1289.
{20} 	In C.R. Anthony Co. v. Loretto Mall Partners, 112 N.M. 504, 817 P.2d 238
(1991), our Supreme Court rejected the “‘plain-meaning’ or ‘four-corners’ standard
[of contract interpretation], under which ambiguity is determined by the court without
consideration of any evidence outside the contract itself to explain the purposes or
context of the contract[.]” 	Mark V, Inc., v. Mellekas, 114 N.M. 778, 781, 845 P.2d
1232, 1235 (1993). 	In doing so, the Court relied on “the difficulty of ascribing
meaning and content to terms and expressions in the absence of contextual
understanding[.]” 	C.R. Anthony, 112 N.M. at 508, 817 P.2d at 242. 	Thus, “in
determining whether a term or expression to which the parties have agreed is unclear,
a court may hear evidence of the circumstances surrounding the making of the
contract and of any relevant usage of trade, course of dealing, and course of
performance.” Id. at 508-09, 817 P.2d at 242-43 (footnote omitted).
[I]f the court finds ambiguity, the jury (or the court as the fact finder in
the absence of a jury) resolves the ambiguity as an issue of ultimate fact
before deciding issues of breach and damages. 	The question of
interpretation of language and conduct (the question of the meaning to
be given the words of the contract) is a question of fact where that
meaning depends on reasonable but conflicting inferences to be drawn

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from events occurring or circumstances existing before, during, or after
negotiation of the contract.
Id. at 509, 817 P.2d 243 (citation omitted).
{21} 	Contextual understanding is necessary to construe restrictive covenants in a
manner consistent with the intent and expectation of the parties. 	Thus, extrinsic
evidence is admissible to explain or clarify, but not to vary or contradict, a restrictive
covenant’s terms. 	Id. (concluding that the parol evidence rule does “not bar
introduction of evidence to explain terms”). “To hold otherwise would be to relegate
to judicial divination the determinative issues of many . . . disputes.” Id. at 510, 817
P.2d at 244. Pursuant to C.R. Anthony and its progeny, we conclude that the courts
are not obligated to apply the rule of strict construction in determining whether the
language of a restrictive covenant is ambiguous, or in resolving a factual dispute
regarding the restrictive covenant’s meaning.
{22} 	We recognize that this Court previously has held that “[t]he secret, unexpressed
intentions of the developer are not admissible to interpret the meaning of a covenant
running with the land” and that “[t]he developer’s testimony may not be used to
decide what is essentially a threshold question—is the covenant, as it reads,
ambiguous?” 	Wilcox v. Timberon Protective Ass’n, 111 N.M. 478, 484, 806 P.2d
1068, 1074 (Ct. App. 1990); see Aragon, 2003-NMCA-126, ¶ 14. 	However, our

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statement in Wilcox pre-dated the Supreme Court’s opinion in C.R. Anthony, which,
as previously explained, explicitly overruled the “plain-meaning” or “four-corners”
standard of contract interpretation. C.R. Anthony, 112 N.M. at 508, 817 P.2d at 242
(internal quotation marks omitted). 	Accordingly, we do not follow Wilcox in this
case.
{23} 	Our holding is consistent with the Restatement (Third) of Property: Servitudes
§ 4.1 (2000), which instructs that “[a] servitude should be interpreted to give effect to
the intention of the parties ascertained from the language used in the instrument, or
the circumstances surrounding the creation of the servitude, and to carry out the
purpose for which it was created.” The Restatement “departs from the often expressed
view that servitudes should be narrowly construed to favor the free use of land” in
recognition of the fact that “servitudes are widely used in modern land development
and ordinarily play a valuable role in utilization of land resources.” 	Restatement
(Third) of Property: Servitudes § 4.1 cmt. a; see Jones, 2005-NMCA-124, ¶ 9
(recognizing 	that 	restrictive 	covenants 	“have 	allowed 	the 	creation 	of 	stable
arrangements of land use” (internal quotation marks and citation omitted).
{24} 	A majority of our sister states similarly have rejected the rule of strict
construction, reasoning “that private land use restrictions have been particularly
important in the twentieth century when the value of property often depends in large

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measure upon maintaining the character of the neighborhood in which it is situated.”
Joslin v. Pine River Dev. Corp., 367 A.2d 599, 601 (N.H. 1976) (internal quotation
marks and citation omitted). 	The majority rule recognizes that the intent of the
parties, rather than the free use of land, “is the cardinal principle in interpreting
restrictive covenants.” Powell v. Washburn, 125 P.3d 373, 377 (Ariz. 2006) (en banc)
(internal quotation marks and citation omitted); see Highbaugh Enters. Inc. v.
Deatrick & James Const. Co., 554 S.W.2d 878, 879 (Ky. Ct. App. 1977) (holding that
restrictive covenants “are to be regarded more as a protection to the property owner
and the public rather than as a restriction on the use of property, and that the old-time
doctrine of strict construction no longer applies”); Markey v. Wolf, 607 A.2d 82, 88-93
(Md. Ct. Spec. App. 1992) (explaining that Maryland, as well as other states, have
rejected the rule of strict construction in favor of a “reasonableness rule” that focuses
on the intent of the parties) (internal quotation marks omitted); Riss v. Angel, 934 P.2d
669, 676 (Wash. 1997) (en banc) (holding that “in Washington[,] the intent, or
purpose, of the covenants, rather than free use of the land, is the paramount
consideration in construing restrictive covenants”). Likewise, we conclude that the
intent of the parties controls the interpretation of restrictive covenants under New
Mexico law.

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{25} 	Applying the foregoing principles to the facts of this case, we conclude that
genuine issues of material fact exist regarding the applicability of the extinguishment
provision to the Country Club Tract and, therefore, summary judgment was improper.
On remand, Plaintiff may present extrinsic evidence, if any such evidence exists,
regarding the circumstances surrounding the adoption of the extinguishment provision
and Bruce and Georgia Griffith’s purpose and intent with respect to the Country Club
Tract. We emphasize that the trier of fact must construe the intended meaning of the
extinguishment provision at the time of its adoption. See C.R. Anthony, 112 N.M. at
509, 817 P.2d at 243 (“It is important to bear in mind that the meaning the court seeks
to determine is the meaning one party (or both parties, as the circumstances may
require) attached to a particular term or expression at the time the parties agreed to
those provisions.”). 	Accordingly, Bruce and Georgia Griffith’s subsequent oral
representations to the homeowners in the Agua Fria Subdivision only are admissible,
if at all, to the extent that they clarify the intended meaning of the extinguishment
provision, as applied to the Country Club Tract, on July 7, 1954.
C. 	Whether Plaintiff’s Amendment to the Restrictive Covenants is Valid
{26} 	In its request for relief, Plaintiff asks this Court to recognize the validity of its
amendment to the restrictive covenants, which provides that the “[t]he Country Club
Tract shall remain permanently undeveloped and an open space park, as it has for the

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last . . . 51 years, for the benefit of Agua Fria owners.” 	Defendant responds that
Plaintiff’s amendment is invalid because “a majority of property owners cannot amend
the restrictive covenants to impose new burdens on only one select property.”
{27} 	“To preserve a question for review[,] it must appear that a ruling or decision by
the district court was fairly invoked[.]” Rule 12-216(A) NMRA; see Chrysler Credit
Corp. v. Beagles Chrysler-Plymouth, 83 N.M. 272, 273, 491 P.2d 160, 161 (1971)
(holding that a “matter not brought to the attention of the trial court cannot be raised
for the first time on appeal”). 	Plaintiff did not ask the district court to rule on the
validity of its amendment to the restrictive covenants. 	The issue, therefore, is not
preserved for appellate review, and we decline to address it. Andalucia Dev. Corp.
v. City of Albuquerque, 2010-NMCA-052, ¶ 25, 148 N.M. 277, 234 P.3d 929
(“Appellate courts will not consider issues that went unpreserved at the district court
level.”). Our holding, however, does not preclude Plaintiff from raising this issue on
remand.
III. 	CONCLUSION
{28} 	The district court improperly granted partial summary judgment in favor of
Defendant because genuine issues of material fact exist with respect to whether the
extinguishment provision of the Saving Clause was intended to apply to the Country

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Club Tract. Accordingly, we reverse the judgment of the district court and remand for
further proceedings.
{29} 	IT IS SO ORDERED.
___________________________
MICHAEL E. VIGIL, Judge

WE CONCUR:

MICHAEL D. BUSTAMANTE, Judge

TIMOTHY L. GARCIA, Judge

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