## Facts

- Butler Mountain Estates was a 48-lot residential development subject to recorded restrictive covenants running with the lots.
- The covenants limited lots to single-family residential use and required each dwelling to contain at least 1,100 square feet of habitable floor space on the main level.
- A separate covenant required that building plans receive written approval from the developer and/or the Butler Mountain Estates Property Owners Association, Inc. (the Association) before construction.
- The developers executed a grant transferring their architectural review and approval rights under the covenants to the Association.
- The Association established an architectural review process (through an architectural review committee/board) to evaluate submitted plans.
- Daniel R. Smith and Alice Smith owned a lot in Butler Mountain Estates and submitted house plans for approval.
- The Smiths’ initial plans were rejected because they did not satisfy the 1,100-square-foot main-level requirement.
- The Smiths later submitted revised plans for a geodesic-dome house; the plans were rejected, with the Association expressing concerns that the design and roofline were a marked departure from existing houses, and also concluding the plans did not meet the 1,100-square-foot minimum.
- The Smiths sued the Association seeking declaratory relief (that the covenants were void or unenforceable) and injunctive relief (to stop enforcement and permit construction).
- The trial court granted judgment for the Association (granting the Association’s motion to dismiss in the action) and upheld the rejection of the Smiths’ plans.
- The Smiths appealed.

## Issues

1. Whether competent evidence supported the trial court’s finding that the Smiths’ proposed plans failed to satisfy the covenant requiring at least 1,100 square feet of habitable floor space on the main level.
2. Whether the restrictive covenant requiring prior approval of building plans by the developer and/or the Association was valid and enforceable, even though it granted the approving body discretion.
3. Whether the Association’s denial of the Smiths’ plans was a reasonable, good-faith exercise of the approval power (rather than an arbitrary or capricious denial), including as to the geodesic-dome design.

## Decision

- The Court of Appeals affirmed the trial court’s judgment for the Association.
- The court held the trial court’s findings of fact were binding on appeal if supported by any competent evidence, even if conflicting evidence existed.
- The court concluded competent evidence supported the finding that the Smiths’ plans did not meet the 1,100-square-foot main-level minimum.
- The court upheld the enforceability of the plan-approval covenant, explaining that discretionary architectural-control provisions may be enforced when exercised reasonably and in good faith.
- The court upheld the Association’s rejection of the Smiths’ plans because the noncompliance with the objective square-footage requirement supported denial and supported the judgment against the Smiths.

## Legal Principles

- A trial court’s findings of fact after a bench trial are conclusive on appeal if supported by any competent evidence; appellate courts do not reweigh conflicting evidence.
- Recorded subdivision covenants setting minimum dwelling size (including minimum habitable floor space on the main level) are generally enforceable when clearly stated and applicable to the lot.
- Covenants requiring prior approval of building plans by a developer or owners association may be valid even if they confer broad discretion, so long as the approving authority acts reasonably and in good faith.
- An association’s denial of proposed plans will be sustained when supported by competent evidence of covenant noncompliance and when the denial is not arbitrary or capricious.

## Conclusion

The Court of Appeals affirmed judgment for the Association, holding that the trial court’s findings were supported by competent evidence, including that the Smiths’ proposed house plans failed to meet the covenant requiring at least 1,100 square feet of habitable main-level floor space; the court also treated the subdivision’s architectural-approval covenant as enforceable when the approving body acts reasonably and in good faith, and upheld the Association’s rejection of the Smiths’ proposed construction.


Smith v. Butler Mountain Estates Property Owners Association, Inc., 90 N.C. App. 40 (1988)