Attorneys for Appellant Attorney for Appellees
Michael H. Michmerhuizen David Van Gilder
Patrick G. Murphy Fort Wayne, Indiana
Fort Wayne, Indiana
Appeal from the Allen Superior Court, No. 02D07-0003-CP-470
The Honorable Nancy Eshcoff Boyer, Judge
On Petition To Transfer from the Indiana Court of Appeals, No. 02A03-0204-CV-112
June 17, 2004
On review, the Court of Appeals reversed the trial courts judgment on grounds
that the unclean hands doctrine was not applicable to the facts of this
case. In the courts view, because the Association was not a homeowner
and did not itself violate the covenant, its own hands were not unclean.
See Wedgewood Cmty. Assn, Inc. v. Nash, 781 N.E.2d 1172, 1179 (Ind.
Ct. App. 2003), rehg granted, 789 N.E.2d 495, 496 (Ind. Ct. App. 2003).
I believe we should grant transfer in this case to correct substantial
The trial court entered special findings pursuant to Indiana Trial Rule 52(A) which
prohibits a reviewing court on appeal from setting aside the trial court's judgment
"unless clearly erroneous." A trial courts judgment is "clearly erroneous only if
(i) its findings of fact do not support its conclusions of law or
(ii) its conclusions of law do not support its judgment.
Dunson, 769 N.E.2d 1120, 1123 (Ind. 2002).
For the regulation and government of judicial action, courts of equity have formulated
certain rules or principles which are described by the term maxims. There
are a number of equitable maxims that involve the question of whether the
conduct of a party seeking equitable relief entitles the party to the courts
assistance. Where it appears that the litigant has not acted in accordance
with these maxims, as a general rule relief will be denied. 27A
Am. Jur. 2d Equity § 119 (1996). One such maxim is that
he who seeks equity must come into court with clean hands. This
maxim closes the door of a court of equity to one tainted with
inequitableness or bad faith relative to the matter in which he seeks relief,
however improper may have been the behavior of the defendant.
Sys., Inc. v. N.L.R.B.
, 510 U.S. 317, 330 (1994) (Scalia, J., concurring) (quotation
As one treatise has observed, Almost any kind of conduct the
[court] may consider to be unethical or improper might suffice to bar the
plaintiffs claim, even if the conduct is not actually illegal. 1 Dan
B. Dobbs Law of Remedies § 2.4(2) (2d ed. 1993). Thus the
maxim necessarily gives wide range to the equity courts use of discretion in
refusing to aid the unclean litigant. Precision Instrument Mfg. Co. v. Auto.
Maint. Mach. Co., 324 U.S. 806, 816 (1945);
Packers Trading Co. v. Commodity
Futures Trading Commn ,
972 F.2d 144, 149 (7th Cir. 1992) (observing that the
Court is not bound by formula or restrained by any limitation that tends
to trammel the free and just exercise of discretion) (quotation omitted).
In this case focusing on Nashs claim that [i]t is clearly inequitable for Wedgewood to bring a suit based on Nashs alleged violation of a restrictive covenant when Wedgewoods board member is in violation, Wedgewood, 781 N.E.2d at 1178 (quoting Appellees Br. at 10), the Court of Appeals reasoned that the Association itself did not violate the covenant because it is not a resident of the neighborhood. Thus according to the court the unclean hands doctrine is not applicable to this case, and the trial courts decision is clearly erroneous. Id. Although the opinion does not say so in express terms, implicit in the Court of Appeals reasoning is that the conduct of a board member cannot be imputed to the corporation for purposes of applying the equitable maxim of clean hands. First, I am not so sure about the correctness of this proposition. See, e.g., Traylor v. By-Pass 46 Steak House, Inc., 259 Ind. 224, 285 N.E.2d 820, 822 (1972) (declaring unclean hands doctrine would apply to corporation if directors misconduct had been intentional).
In any event, the fact that the Association is not a homeowner and
could not have violated the restrictive covenant is beside the point. The
trial court recognized that the Association was seeking by injunction to enforce a
covenant against one homeowner, while at the same time declining to enforce against
two other homeowners a near-identical violation of the same covenant. One of
the violators just happened to be a member of the Associations Board of
Directors. It may indeed be the case that the [a]lleged selective enforcement
of restrictive covenants is clearly not a violation of the restrictive cov
outbuildings and may be remedied by the ballot box of the association officer
election. Wedgewood, 781 N.E.2d at 1179. The question however is whether
the selective enforcement in this case was inequitable and improper, thus barring the
Associations claim for equitable relief. Declining to grant the Associations complaint for
injunction, the trial court answered yes. The denial of an injunction lies
within the sound discretion of the trial court and will not be overturned
unless it was arbitrary or amounted to an abuse of discretion. Stewart
v. Jackson, 635 N.E.2d 186, 189 (Ind. Ct. App. 1994). Here the
trial courts judgment was not clearly erroneous and its decision was neither arbitrary
nor an abuse of discretion. We should grant transfer and say so.
Dickson, J., concurs.