Also known as: restrictive covenant · restrictive covenanting · non-compete covenant · noncompetition covenant
Written by attorneys — see sources below.
A negative covenant that limits permissible uses of land. A negative easement is a restrictive covenant.
Ricardo Rojas granted his neighbor an irrevocable right to prevent any industrial structures on his parcel. When a later buyer proposed a sawmill, the neighbor enforced the restriction as a restrictive covenant running with the land.
Rosalind Reed recorded a declaration barring high-volume storage on each condo unit. After Regina Robinson purchased a unit and began storing client records, the neighboring owner enforced the prohibition as a restrictive covenant that ran with the land.
Roberto Reyes and other owners agreed to covenants barring sale to Black buyers. When Riley Rivera attempted to purchase a burdened lot, the sellers sought a court injunction to enforce the restriction.
In February 1911, thirty out of thirty-nine owners of property fronting both sides of Labadie Avenue between Taylor Avenue and Cora Avenue in St. Louis signed a recorded agreement. The agreement restricted the use and occupancy of the properties for fifty years to persons of the Caucasian race. It excluded occupancy by people of the Negro or Mongolian race. The district included fifty-seven parcels of land. The signers held title to forty-seven parcels. At the time, five parcels were owned by Negroes, with one occupied by Negro families since 1882. On August 11, 1945, the Shelley petitioners, who are Negroes, purchased one parcel from Fitzgerald by warranty deed for valuable consideration without knowledge of the restriction. On October 9, 1945, respondents sued in the Circuit Court of St. Louis to restrain the Shelleys and divest title. The trial court denied relief, but the Supreme Court of Missouri reversed and directed enforcement. In June 1934, Ferguson and his wife executed a contract restricting their Detroit property to Caucasian occupancy. The restriction was effective only if at least eighty percent of the lots in the block were subjected to similar restrictions. The restrictions were to remain in effect until January 1, 1960. Similar agreements covered eighty percent of the lots. By deed dated November 30, 1944, the McGhee petitioners, who were Negroes, acquired and occupied the Detroit property. On January 30, 1945, respondents sued in Wayne County Circuit Court. The court ordered them to move within ninety days and enjoined future occupancy. The Supreme Court of Michigan affirmed. Petitioners claimed that judicial enforcement violated the Fourteenth Amendment.
View caseRhapsody Entertainment entered agreements with foreign producers that restricted aluminum imports into the United States. The government challenged the covenants as part of an antitrust suit against the company.
Alcoa was incorporated in Pennsylvania on September 18, 1888, as the Pittsburgh Reduction Company and later changed its name in 1907. Through assignment of the Hall patent in 1889 and the Bradley patent in 1892, Alcoa secured a legal monopoly on virgin ingot manufacture that lasted until the patents expired in 1906 and 1909 respectively. Beginning in 1895, Alcoa obtained water power through contracts that restricted the power companies from supplying others for aluminum manufacture. It also participated in successive cartels with foreign aluminum producers that limited imports into the United States. In 1912 the United States brought suit against Alcoa, resulting in a consent decree that enjoined several restrictive covenants. From 1909 onward Alcoa remained the only domestic producer of virgin ingot. Its share of virgin ingot available for sale in the United States exceeded 90 percent for most years after 1912 and averaged over 90 percent from 1934 to 1938. Alcoa expanded its production capacity from two plants producing less than 42 million pounds in 1912 to five plants producing approximately 327 million pounds by 1934. In 1928 Alcoa transferred its foreign properties to a newly formed Canadian corporation, Aluminum Limited, whose shares were distributed to Alcoa's shareholders. Limited later joined with foreign producers in the Alliance cartel agreements of 1931 and 1936 that established production quotas and royalties for aluminum. Alcoa also engaged in a price squeeze on aluminum sheet from 1925 to 1932 by maintaining high ingot prices and low sheet prices that left little margin for independent sheet rollers. The complaint in this action was filed on April 23, 1937. Trial took place from June 1, 1938, to August 14, 1940, producing over 40,000 pages of testimony. The district court delivered its opinion in 1941, filed findings in 1942, and entered judgment dismissing the complaint on July 23, 1942. The Supreme Court referred the appeal to the Second Circuit on June 12, 1944, because a quorum of qualified justices was lacking.
View caseRiverside Healthcare required Roland Rhodes to sign a noncompete barring work for competitors nationwide for three years after termination. Rhodes later challenged the clause when offered a similar position at another provider.
Mary Armendariz and Dolores Olague-Rodgers were hired by Foundation Health Psychcare Services, Inc. in July and August of 1995 for positions in the Provider Relations Group and were later promoted to supervisory roles with annual salaries of $38,000. As a condition of their employment, the employees signed application forms and separate arbitration agreements that required binding arbitration of any dispute arising from termination of employment. The arbitration clause provided that the employees' exclusive remedies would be limited to back wages from the date of discharge until the arbitration award and expressly excluded other remedies such as reinstatement and injunctive relief. On June 20, 1996, the employees were informed that their positions were being eliminated and that they were terminated. During their employment, they alleged that supervisors and coworkers engaged in sexually based harassment and discrimination, and they claimed the termination occurred because of their perceived or actual sexual orientation. The employees filed a complaint against the employer and its parent company alleging a cause of action for violation of the FEHA as well as tort and contract claims for wrongful termination, seeking general damages, punitive damages, injunctive relief, and attorney fees and costs. The employer filed a motion to compel arbitration under Code of Civil Procedure section 1281.2, supported by declarations. The trial court denied the motion, concluding that the arbitration agreement was an adhesion contract containing provisions so one-sided as to shock the conscience, including the requirement that only employees arbitrate claims and the limitation of damages to backpay. The Court of Appeal reversed the trial court's order, holding that the damages provision was unconscionable but that the remainder of the agreement should be enforced after severance. The Supreme Court granted review of the case.
View caseRocky Mountain Mining operated a feedlot subject to a recorded covenant limiting operations to daytime hours. When a developer built homes nearby and sued to enjoin nighttime activity, the court considered whether the covenant barred the claim.
In 1956, Spur’s predecessors in interest developed feedlots about ½ mile south of Olive Avenue in an area between the confluence of the usually dry Agua Fria and New Rivers, some 14 to 15 miles west of the urban area of Phoenix. By April and May of 1959, the Northside Hay Mill was feeding between 6,000 and 7,000 head of cattle and Welborn approximately 1,500 head on a combined area of 35 acres. In 1960, Spur purchased the property and expanded the feedlot operation from approximately thirty-five acres to one hundred fourteen acres by 1962, eventually maintaining between twenty thousand and thirty thousand head of cattle at the time of trial. Del E. Webb Development Co. began planning Sun City, a retirement community, in May 1959 after purchasing twenty thousand acres of farmland for fifteen million dollars. Construction of a golf course started that September. Homes were first offered in January 1960. The first residents moved in during 1960. By the time of trial, Sun City had a population of approximately fourteen thousand people, and the development had extended south to within five hundred feet of Spur's feedlot north of Olive Avenue. Residents of Sun City began complaining about odors and flies from the feedlot, which produced over a million pounds of wet manure per day, and Webb encountered sales resistance starting around 1963 in the southwestern portion of the development. Webb attempted to buy the feedlot from Spur but the parties could not agree on a price. Webb then filed suit alleging that the feedlot was a public nuisance because flies and odors drifted over the southern portion of Sun City, rendering in excess of one thousand three hundred lots unfit for residential development. The trial court, after proceedings that included an advisory jury later discharged and special actions in the Arizona Supreme Court, found the feedlot to be a nuisance, permanently enjoined its operation, and awarded damages to Webb. Spur appealed from the injunction and the damages award, while Webb cross-appealed from the trial court's refusal to award attorneys' fees. During the appeal process, Spur agreed to and did shut down its operation without prejudice to the final determination.
View caseA restrictive covenant requires the burdened owner to refrain from certain uses of land. An affirmative covenant instead requires the owner to perform an act such as making payments or maintaining a shared facility.
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The covenant runs when the creating instrument states that the burden or benefit applies to present and future owners of the affected parcels and the restriction limits permissible land uses.
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State courts cannot constitutionally enforce private agreements that bar sale or lease of property on the basis of race because such enforcement constitutes state action violating equal protection.
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Under the Restatement a negative easement is treated as a restrictive covenant because the obligation not to use land in specified ways has become indistinguishable from a use-limiting covenant.
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…of potential pupils and their parents; and to Barrows v. Jackson , 346 U. S. 249, where a white defendant, party to a racially restrictive covenant, who was being sued for damages by the covenantors because she had conveyed her property to Negroes, was allowed to raise the issue that enforcement of the covenant violated the rights of…