Present:   All the Justices

HERMAN E. LEEMAN, ET AL.

v.   Record No. 992258        OPINION BY JUSTICE DONALD W. LEMONS
                                         June 9, 2000
TROUTMAN BUILDS, INC.

           FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
                  Benjamin N.A. Kendrick, Judge

     In this appeal we consider whether summary judgment was

properly granted in a dispute over a restrictive covenant.

                                 I

     Garfield Manor Corporation (“Garfield Manor”) subdivided

certain land in Arlington County into seven lots and recorded

the plat of the subdivision under the name “Oakcrest.”    In

1927, Garfield Manor conveyed Lot 6B with a deed containing a

restrictive covenant that stated: “Not more than one dwelling

shall be erected on said lot except with written approval of

the vendor.”   On June 3, 1958, the State Corporation

Commission terminated the corporate existence of Garfield

Manor.

     On May 27, 1998, Troutman Builds, Inc. (“Troutman”) sent

a letter to each of the other ten landowners in the Oakcrest

subdivision stating that Troutman had a contract to purchase

Lot 6B from Joyce Faherty, James Holland, Jr., and Jon

Holland, and informing the landowners that the County had

preliminarily approved Troutman’s plans to subdivide Lot 6B
into two lots.    The stated plan was for the Troutman family to

live in the existing house on the first resubdivided lot and

for Troutman to build a new house on the second resubdivided

lot.    All homeowners were asked to waive the restrictive

covenant.    In its letter, Troutman stated that the homeowners

in the subdivision were the successors to Garfield Manor and

that one owner’s refusal to waive the restriction could void

the project.    After Troutman failed to get all the homeowners

to agree to waive the restrictive covenant, Joyce Faherty,

James Holland, Jr., and Jon Holland instituted a declaratory

judgment action against Garfield Manor in the Circuit Court of

Arlington County, Law No. 98-918 (“Faherty”).    No notice was

given to the ten homeowners who had received Troutman’s letter

and no homeowners were named as parties.

       On December 16, 1998, the trial court entered a default

judgment against Garfield Manor in the Faherty case, holding

that although the property at issue was burdened with the

restrictive covenant, the covenant was void because it was

impossible to perform “as no vendor [exists] to give

permission for the construction of a second dwelling on the

lot.”

       On May 13, 1999, Herman E. and Mary E. Leeman and

their neighbors Raymund A. and Berta S. Plunkett filed a

bill of complaint for declaratory judgment against


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Troutman seeking a declaration that (1) the final order

in Faherty was not enforceable against them and, (2) the

restrictive covenant barring the construction of an

additional residence on the lot was enforceable against

Troutman. 1   Among the allegations in the bill are the

assertions that both the Leemans and the Plunketts own

property in the same subdivision and “are subject to and

protected by the same restrictive covenant derived from a

common grantor along with the Defendants.”    After

referring to the subdivision plan and the specific

covenant against building more than one dwelling per lot,

they further alleged that the grant from Garfield Manor

“was intended to benefit all land and land owners from

the common grant so designated.”

     Troutman filed its Answer and Grounds of Defense and

moved for summary judgment.    The trial court granted

summary judgment in favor of Troutman, stating that “the

covenant at issue cannot be performed under any

circumstances because the vendor, Garfield Manor

Corporation, no longer exists and therefore can neither

grant nor deny permission to construct further dwellings


     1
       At some time after the conclusion of the Faherty
litigation, Joyce Faherty, James Holland, Jr., and Jon Holland
transferred their interest in the subject property to
Troutman.


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on the Property.”   The order further stated: “by the

final order in [Faherty], . . . this court determined

that the covenant at issue is void as unenforceable as a

matter of law” and “more than 21 days has elapsed since

the entry of the final order in [Faherty]” and that

“there are no material facts at issue.”   This appeal

followed.

    The Leemans and Plunketts argue that the covenant in

question is not impossible to perform and that the prior

adjudication in Faherty is not binding upon them because they

were not parties to, and had no notice of, the proceedings.

Additionally, the Leemans and Plunketts maintain that the

pleadings sufficiently allege material questions of fact

concerning the interpretation of the covenant, thereby making

summary judgment inappropriate.

    Troutman asserts that the “covenant at issue is based on

the continued existence of Garfield Manor Corporation to give

or deny permission to construct additional dwellings on the

Property.   However, because Garfield Manor Corporation was

terminated, it can no longer give or deny that permission,

making the covenant impossible to perform.”   Additionally,

Troutman maintains that the final unappealed order in Faherty

determining that the covenant was impossible to perform is




                                  4
binding upon the Leemans and the Plunketts and is dispositive

of the issues in this case.

                              II

     The Leemans and the Plunketts allege in their first

assignment of error that “[t]he trial court erred in ruling

that an ex parte final order in a case involving the subject

matter restrictive covenant is binding on necessary parties

not named in the action in which the final order was issued.”

     We have stated that:

          One of the fundamental prerequisites to
     the application of the doctrine of res judicata
     is that there must be an identity of parties
     between the present suit and the prior
     litigation asserted as a bar. A party to the
     present suit, to be barred by the doctrine,
     must have been a party to the prior litigation,
     or represented by another so identified in
     interest with him that he represents the same
     legal right.

Dotson v. Harman, 232 Va. 402, 404-05, 350 S.E.2d 642, 644

(1986).

     The Leemans and the Plunketts were not parties to the

prior litigation in Faherty and were not “represented by

another so identified in interest with [them] that he

represents the same legal right.”     We hold that the judgment

in Faherty does not preclude the Leemans and Plunketts from

maintaining the current action.

                              III



                                  5
    Summary judgment is appropriate only when there are no

material facts genuinely in dispute on a dispositive issue.

Rule 2:21.   See generally, Stone v. Alley, 240 Va. 162, 392

S.E.2d 486 (1990).   Construction of a controlling document may

be an appropriate basis for summary judgment in Virginia, see

Vicars v. First Virginia Bank-Mountain Empire, 250 Va. 103,

458 S.E.2d 293 (1995)(construction of letter and other

instruments), but only where it is shown that the moving party

is entitled to judgment as a matter of law.   See Rule 2:21;

Ciejek v. Laird, 238 Va. 109, 113, 380 S.E.2d 639, 641-42

(1989) (inappropriate to grant summary judgment based on

controlling document when the instrument is ambiguous, or

raises interpretation issues, requires parol evidence, or

turns on other proof of its meaning or the intentions of the

parties to the instrument).

    Here, the trial court concluded that the termination

of Garfield Manor’s corporate existence made performance

of the covenant impossible.   This conclusion was

erroneous.   It is not impossible to perform the covenant.

The covenant literally requires that “not more than one

dwelling shall be erected on said lot.”   Compliance with

the terms of the covenant is simple: no further

construction of dwellings may be made on the lot.   See,




                                6
e.g., Woodward v. Morgan, 252 Va. 135, 138, 475 S.E.2d

808, 810 (1996).

    Additionally, issues of material fact which were not

susceptible of summary adjudication on the state of this

record include: (1) whether the covenant in the 1927 deed

was a personal right reserved to Garfield Manor or was a

covenant running with the land and, (2) whether the

grantor’s intent was to benefit common grantees with

similar restrictions, and create a common scheme of

development allowing neighboring landowners to enforce

equitable servitudes upon the subject property.   “We have

recognized two separate and distinct types of restrictive

covenants: the common law doctrine of covenants running

with the land and restrictive covenants in equity known

as equitable easements and equitable servitudes.”     Sloan

v. Johnson, 254 Va. 271, 274-75, 491 S.E.2d 725, 727

(1997).   See also Mid-State Equip. Co., Inc. v. Bell, 217

Va. 133, 141, 225 S.E.2d 877, 884 (1976).   A more

complete evidentiary record is necessary in the present

case to resolve these issues.

    Troutman maintains that the covenant involved in

Allison v. Greear, 188 Va. 64, 49 S.E.2d 279 (1948), “is

almost identical to the covenant at issue”.   Although




                                7
some similarities exist, we declined to decide in Allison

one of the important issues raised in this case.

    In Allison, the deed in question recited:

    The parties of the second part, by accepting
    this deed, covenant for themselves, their heirs
    and assigns, that the real estate hereby
    conveyed will not be used by the parties of the
    second part, their heirs or assigns, for the
    purpose of conducting thereon a mercantile
    business, without the written consent of the
    parties of the first part, or their children,
    or grandchildren.

Id. at 65, 49 S.E.2d at 279.    The grantors, who owned and

operated a mercantile establishment on neighboring

property, sought to prevent the grantees from operating a

mercantile establishment on their property.      Id. at 65-

66, 49 S.E.2d at 279.    The trial court issued an

injunction in enforcement of the covenant.      Id. at 65, 49

S.E.2d at 279.

    In reversing and vacating the injunction, we placed

great emphasis on the testimony of the grantors that the

purpose of the restriction was “the protection of our own

business interests and for the protection of our own

children.”     Id. at 66, 49 S.E.2d at 280.   The grantors

sold their lot, including the building in which they had

conducted a mercantile business, prior to the controversy

in question.     Id. at 66, 49 S.E.2d at 279.   We concluded:




                                  8
    'From the language in the restriction itself
    read in the light of its purpose as testified
    to by the Greears, the conclusion is
    inescapable that, if valid, it is not a
    covenant running with the land. At most,
    . . ., it is only a personal restriction which
    can be released at the will of the grantors, or
    their children, or their grandchildren, at any
    time. It being a personal restriction for the
    sole purpose of restraining competition in
    their mercantile business, and they having sold
    their business in 1945, they have no mercantile
    business to protect. There is no evidence that
    they intend, in the future, to reestablish such
    a business, or that their children or their
    grandchildren (the latter being infants) will
    ever desire to open or conduct a mercantile
    business in this neighborhood. Under these
    circumstances, if the restriction were
    originally valid, its duration, so far as the
    grantors are concerned, continued only during
    the time they were actually engaged in the
    mercantile business, which terminated in 1945.

    'In 14 Am. Jur., Covenants, at the end of
    paragraph 205, it is clearly stated that, “A
    covenant personal to one is terminated by his
    death or by his ceasing to have an interest in
    the property, his use of which is benefited by
    the restriction.”

Id. at 67, 49 S.E.2d at 280.

    In this case, the intent of the developer, Garfield

Manor, is relevant to determine whether the covenant in

question runs with the land or is personal in nature.

The language of the deed, which here recites that the

restrictions are to run with the land, is evidence of

intent but may not be dispositive of the question.

Significantly, in Allison, we reserved judgment



                               9
concerning the rights of neighboring property owners,

stating:

    Our decision is limited to the proposition that
    the grantors are not entitled to equitable relief
    under the facts. The questions that might arise
    in the future as to the rights of the lot owners,
    as between themselves, or as between themselves
    and the grantors in the restriction are not
    decided.

Id. at 67, 49 S.E.2d at 280.

                            IV

    The trial court erred in deciding that the covenant

in question is unenforceable because of impossibility of

performance.   Because material questions of fact are

placed into issue by the present state of the record in

this litigation, further determinations on the

enforceability and application of the covenant must await

factual submissions, and summary judgment was improper.

Rule 2:21.

    Accordingly, we will reverse the judgment of the

trial court and remand for further proceedings consistent

with this opinion.

                                         Reversed and remanded.




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