9394 LLC v. Farris

In 9394 LLC v. Farris, (10 AD3d 708, 782 N.Y.S.2d 281 [2004]) to consider the parameters of a restrictive covenant, in an action for a permanent injunction, which provided, in relevant part, "that no manufactory, trade or business of any kind whatsoever shall at any time hereafter be erected, maintained or permitted upon the premises" and "the term 'business' shall be deemed to prohibit the operation or maintenance of a school, hotel, or boarding or lodging house." The Appellate Division determined that such covenant "cannot be said unambiguously to prohibit the activities engaged in by the defendants." It also determined that it would be unreasonable to interpret the covenant to preclude the defendants owners in the privacy of their own home, from conducting certain incidental business-related activities, such as reading work-related documents or using the telephone, fax, or e-mail for incoming or outgoing communications, where those activities are not readily discernible to the public at large, or to other residents of the particular community. The Appellate Division also determined that the owners' admitted use of the premises as the nominal corporate headquarters of the company, did not, standing alone, violate the covenant as a matter of law or raise a triable issue of fact regarding the owners' compliance with the covenant. The Appellate Division noted that there was uncontradicted evidence that such use did not create any increase in traffic, commercial or otherwise. It found that neither the letter nor the spirit of the covenant was offended so long as the business-related activities of the owners remained subordinate to the primary use of the premises as the owners' residence and provided that such activities are not readily discernible by other residents of the community.