RENDERED: AUGUST 21, 2026; 10:00 A.M.
TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeal
NO. 2025-CA-0192-MR
CHAD A. STEELE AND
LINDY D. STEELE APPELLANTS
APPEAL FROM MARSHALL CIRCUIT COURT
v. HONORABLE ANDREA LEE MOORE, JUDGE
ACTION NO. 23-CI-00304
SRH, LLC APPELLEE
AND
NO. 2025-CA-1011-MR
SRH, LLC APPELLANT
APPEAL FROM MARSHALL CIRCUIT COURT
v. HONORABLE ANDREA LEE MOORE, JUDGE
ACTION NO. 23-CI-00304
CHAD A. STEELE AND
LINDY D. STEELE APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: COMBS, MOYNAHAN, AND TAYLOR, JUDGES.
TAYLOR, JUDGE: Chad A. Steele and Lindy D. Steele (collectively referred to
as the Steeles) bring Appeal No. 2025-CA-0192-MR from a January 22, 2025,
order of the Marshall Circuit Court granting a motion for summary judgment
dismissing their claim that a restrictive covenant burdened real property owned by
SRH, LLC (SRH). SRH, LLC, brings Appeal No. 2025-CA-1011-MR from an
August 11, 2025, order of the Marshall Circuit Court dismissing its counterclaim
for abuse of process against the Steeles. We affirm Appeal Nos. 2025-CA-0192-MR and 2025-CA-1011-MR.1
Background
The Steeles and SRH own lots of real property in Kentucky Lake
Subdivision. It appears that the subdivision contains a total of 174 lots. The
Steeles purchased their lot (17) on July 5, 2016, and their deed contained a
restrictive covenant that prohibited use of the lot for commercial purposes. SRH
purchased their lots (18 and 20) on April 1, 2022, and neither the deed nor any
deed in its chain of title contained a similar restrictive covenant prohibiting
1
Because these related appeals arise from the same action below, for judicial economy, they have been consolidated for review on the merits by this Court.
-2-commercial uses. Subsequently, SRH advertised that its property was available for
short-term rentals on VRBO.
On September 8, 2023, the Steeles filed a complaint against SRH in
the Marshall Circuit Court. Therein, the Steeles alleged:
3. The subdivision/developer of Kentucky
Lake Subdivision, Kentucky Lake Subdivision, a
partnership, adopted and imposed upon the lots a
declaration of restrictions and covenants which included
the following:
“No lot or lots in sub-division shall be used
for commercial, manufacturing or business
purposes. . . .”
The deeds imposing these restrictions stated that they
“shall be covenants running with the land.”
4. Said restrictions, including the above-quoted
restriction, were adopted to impose a general scheme of
development upon the subdivision to induce purchase of
the lots for residences, to maintain the subdivision as a
desirable residential area and to protect the lots from
improper use by future owners.
5. Filing of said restrictions and covenants,
which run with the land, burdened the owners of all lots
in the subdivision, including lots 18 and 20 (lots owned
by Defendant, SRH, LLC) with restrictions in which all
owners of lots in the subdivision have an interest and
between whom there exists mutuality of consideration
and consent; the said restrictions and covenants run with
the land and may be enforced by Plaintiffs or any other
owner of a lot in the subdivision.
6. Notwithstanding the said restrictions and
covenants, and in direct violation of same and of the
-3-rights of Plaintiffs by reason of the said restrictions and
covenants, Defendant is using its lots for business
commercial short term rentals.
7. Such use is in violation of the subdivision
restrictions and violates the general scheme for which the
restrictions were imposed.
8. Defendant has constructive and actual
knowledge of the said restrictions and covenants which
burden its land.
9. Defendant’s actions violate Plaintiffs’ rights
and are causing injury to the Plaintiffs. Defendant should
be permanently enjoined from using its lots for business
and commercial use.
Complaint at 2-3. The Steeles sought an injunction to prevent SRH from renting
the lots for short-term rentals.
SRH filed an answer and counterclaim. In the answer, SRH
maintained that no restrictive covenant prohibiting commercial uses was set forth
in its deed or in its chain of title. And in the counterclaim, SRH claimed that the
Steeles filed the action for the wrongful purpose of coercing it to stop renting the
property even though the Steeles knew that no such restrictive covenant was
included in its deed or chain of title:
Plaintiffs’ Complaint was filed for an ulterior motive of
forcing Defendants to surrender their property rights
without justification, not for the purpose of enforcing a
restrictive covenant that Plaintiff had constructive and
actual notice was not in the Defendant’s chain of title.
Answer at 6. SRH sought compensatory and punitive damages.
-4-Thereafter, SRH filed a motion for partial summary judgment. SRH
argued that no restrictive covenant was included in its deed or in its chain of title as
was included in the Steeles’ deed. SRH maintained:
After taking title to the parent tract from the TVA,
the McKee developers recorded a subdivision plat for
Kentucky Lake Subdivision. The recorded subdivision
plat of Kentucky Lake Subdivision also does not contain
any restriction on the business use of lots therein. The
only restrictions against business use of any lots in
Kentucky Lake Subdivision came about after it was
subdivided. Those restrictions were placed on some lots,
but not all, through warranty deeds from the developers
James P. McKee, et al., to some, but not all, of the buyers
of lots of the Kentucky Lake Subdivision. These
restrictions are included in the chain of title for the
Steeles’ lot, but are not included in the chain of title for
SRH’s Lots 18 and 20.
Plaintiffs’ Complaint attempts to convey the idea
that the developer of Kentucky Lake Subdivision filed a
deed of restrictions or similar document applicable to all
lots in the subdivision. That is simply not the case.
Instead, the restriction cited by the Plaintiff appears only
in the developer’s separate conveyance deeds for some,
but not all of the lots in the subdivision. The alleged
restrictive covenant is not included in any separate
declaration of restrictions, it is not included in the plat,
and it is not generally applicable to all lots in the
subdivision. Most importantly, and dispositive of this
case, the supposed restrictive covenant is not included
anywhere in the chain of title for Lots 18 and 20.
-5-Motion for Partial Summary Judgment at 3-5 (citations omitted). As the restrictive
covenant was not included in its deed or chain of title, SRH argued that its lots
were not burdened by same, and it was entitled to summary judgment.
The Steeles also filed a motion for summary judgment. The Steeles
initially cited to the subdivision plat for Kentucky Lake Subdivision. The Steeles
pointed out that according to the plat, the subdivision contained 174 lots, and on
one lot, the word “commercial” was written thereupon. The Steeles further
maintained that of the remaining 173 lots, the deeds to 168 lots contained the
restrictive covenant prohibiting commercial uses. The Steeles stated that the
restrictive covenant was plainly intended to run with the land and to bind every lot
in the subdivision, including the lots owned by SRH. The Steeles also argued that
as the subdivision plat only included one lot for commercial uses, it was reasonable
to infer that commercial uses were prohibited upon the remaining lots.
By order entered January 22, 2025, the circuit court granted SRH’s
motion for partial summary judgment and denied the Steeles’ motion for summary
judgment. The court concluded that as the restrictive covenant was not in SRH’s
deed, chain of title, or set forth on the subdivision plat, the restrictive covenant was
unenforceable against SRH:
1. Under current and clear Kentucky law, a restrictive
covenant must appear in the chain of title of the
burdened parcel in order to be enforceable. See
Oliver v. Schultz, 885 S.W.2d 699, 701 (Ky. 1994).
-6-Thus, a restrictive covenant cannot bind or burden
land when it does not appear directly in the chain of
title for that land such that an ordinary and prudent
attorney performing a title search would be on notice
of the restrictive covenant. Id. Because Defendant
did not have record notice of the alleged restrictions,
Defendant is not bound, and its land is not burdened,
by the alleged restrictions. There is no way around
this conclusion in the face of the Supreme Court’s
clear language in Oliver.
January 22, 2025, Order at 1. The order included complete Kentucky Rules of
Civil Procedure (CR) 54.02 language.
The Steeles then filed a motion for summary judgment seeking
dismissal of the counterclaim alleging abuse of process. The Steeles asserted that
they harbored no ulterior purpose for filing the action as they merely sought to
enforce the restrictive covenant upon lots purchased by SRH. The Steeles
maintained that they believed the restrictive covenant was applicable to all lots in
the subdivision. The Steeles argued that filing an action that ultimately proved to
lack a legal basis did not constitute an ulterior purpose, and they were entitled to
summary judgment dismissing the abuse of process claim.
In response, SRH maintained that the Steeles knew that the restrictive
covenant was not included in its deed or in its chain of title; nonetheless, the
Steeles pursued legal proceedings to coerce SRH into complying with their
demands to stop using its property for short-term rentals. Additionally, SRH
pointed out that legal counsel for the Steeles sent a letter, wherein the Steeles
-7-demanded compliance with the restrictive covenant or ligation would be initiated.
According to SRH, “[t]hreatening a lawsuit that has no basis in fact and then
continuing the baseless lawsuit all the way to its expensive conclusion is not a
proper use of the legal system and raises a genuine issue of material fact as to
improper motive.” Response at 4.
Subsequently, by order entered August 11, 2025, the circuit court
entered summary judgment dismissing SRH’s claim of abuse of process. The court
determined that “[t]he purpose of movants’ lawsuit was to enforce a restrictive
covenant against Defendant/Counterclaimant. This was the stated purpose of the
lawsuit, not an ulterior purpose.” August 11, 2025, order at 1.
The Steeles filed a notice of appeal (Appeal No. 2025-CA-0192-MR)
from the January 22, 2025, order, and SRH filed a notice of appeal (Appeal No.
2025-CA-1011-MR) from the August 11, 2025, order. We shall address each
appeal seriatim.
STANDARD OF REVIEW
Summary judgment is proper where there exists no genuine issue of
material fact and movant is entitled to judgment as a matter of law. CR 56.03;
Steelvest, Inc. v. Scansteel Service Center, Inc., 807 S.W.2d 476, 480 (Ky. 1991).
All facts and inferences therefrom are viewed in a light most favorable to the
-8-nonmoving party. Our review thereon is de novo. Ashland Hosp. Corp. v. Darwin
Select Ins. Co., 664 S.W.3d 509, 515-16 (Ky. 2022).
APPEAL NO. 2025-CA-0192-MR
The Steeles contend that the circuit court improperly rendered
summary judgment concluding that SRH’s lots were not burdened by the
restrictive covenant. The Steeles point out that of the 174 lots in the subdivision,
the deeds to 168 lots contain the restrictive covenant. The Steeles argue that the
restrictive covenant upon the 168 lots runs with the land and bound subsequent
purchasers. The Steeles maintain that the SRH’s lots were originally sold by the
developer to third parties, but the deeds were never recorded, and no copy exists.
The Steeles believe that the original deeds “likely” contained the restrictive
covenant. Steeles’ Brief at 4. The Steeles also cite to the subdivision plat upon
which one lot was designated for commercial use, and no other lots were so
designated. The Steeles assert that “[t]he owners of the 168 lots, all of whom had
the restrictions in their chain or title, should be able to rely on the restrictions to
protect them from commercial activity in their residential neighborhood.” Steeles’
Brief at 5. For the reasons hereinafter set forth, we conclude that the circuit court
properly determined that the lots owned by SRH were not burdened by the
restrictive covenant.
-9-In this case, it is undisputed that the restrictive covenant prohibiting
commercial uses of lots was not in the deed conveying the lots to SRH and does
not appear in its chain of title. A subdivision plat was filed of record, and on the
plat, there were 174 lots, roads, and a common parking lot drawn thereupon. On
one lot, the word “commercial’ was directly written on top of the lot, but no
restrictions as to the lots or subdivision were specifically included on the plat.
Additionally, there appears to be no deed of restrictions filed prior to the
conveyance of any lots by the developer concerning the subdivision. Rather, the
restrictive covenant prohibiting commercial uses of the lots are found in the
individual deeds and chains of title to 168 of the 174 lots.
The Steeles essentially seek to impose the restrictive covenant upon
the lots purchased by SRH because such restrictive covenant exists in collateral
deeds to other lots in the subdivision, and according to the Steeles, the
grantor/developer intended the restrictive covenant to be applicable to all lots in
the subdivision. The Steeles believe that SRH had actual and constructive notice
of the restrictive covenant and are bound thereby. In effect, the Steeles seek to
impose a reciprocal negative easement or covenant upon the lots owned by SRH.
A reciprocal negative easement “is a covenant which equity raises and
fastens upon the title of a lot or lots carved out of a tract that will prevent their use
in a manner detrimental to the enjoyment and value of neighboring lots sold with
-10-express restrictions in their conveyance.” McCurdy v. Standard Realty Corp., 175
S.W.2d 28, 29 (Ky. 1943). Historically, a reciprocal negative easement was
recognized where:
[T]here . . . [was] a common owner of the related parcels
of land, and in his various grants of the lots he must have
included some restriction, either affirmative or negative,
for the benefit of the land retained, evidencing a scheme
or intent that the entire tract should be similarly treated,
so that once the plan is effectively put into operation, the
burden he has placed upon the land conveyed is by
operation of law reciprocally placed upon the land
retained.
Bellemeade Co. v. Priddle, 503 S.W.2d 734, 736 (Ky 1973) (quoting First Security
Bank & Trust Co. of Lexington v. Peter, 456 S.W.2d 46, 50 (Ky. 1970)); see Black
v. Birner, 179 S.W.3d 873, 878 (Ky. App. 2005).
Examining the requirements of a reciprocal negative easement, in
Bishop v. Rueff, 619 S.W.2d 718, 720 (Ky. 1981),2 the Court of Appeals held that
“the grantee is charged with notice of an encumbrance upon property created by an
instrument which is of record, notwithstanding the fact that it may exist only
collaterally in the chain of title.” The Bishop Court imposed a restrictive covenant
upon property even though the restriction was not contained in the property’s deed,
chain of title, subdivision plat, or deed of restrictions:
2
As hereinafter explained, Bishop v. Rueff, 619 S.W.2d 718 (Ky. 1981), was overruled in part by Oliver v. Schultz, 885 S.W.2d 699 (Ky. 1994).
-11-While the Bishops’ deed was not in appellees’ chain of
title, we are aware of no rule that a restrictive covenant of
this nature must meet such requirement. We believe that
appellees were on constructive notice as to the restriction
limiting fences, and there is some evidence of actual
notice. The “chain of title” argument seems to have been
disposed of by Harp v. Parker, [128 S.W.2d 211 (Ky.
1939)].
We believe the governing principle involved is
stated in McLean v. Thurman, Ky., 273 S.W.2d 825, 829
(1954). Where the owners of two or more lots situated
near one another convey one of the lots with express
restrictions applying thereto in favor of the land retained
by the grantor, the servitude becomes mutual, and during
the period of restraint the owner of the lots retained may
do nothing that is forbidden to the owner of the lot sold.
The restriction is enforceable against the grantor, or
subsequent purchaser, with notice, actual or constructive.
Bishop, 619 S.W.2d at 720 (citation omitted).
However, in Oliver v. Schultz, 885 S.W.2d 699, 701 (Ky. 1994), the
Kentucky Supreme Court specifically sought to clarify “the law in this area.”
Therein, the Supreme Court overruled Bishop in part and held that a restrictive
covenant was only enforceable if contained in a recorded instrument in the
grantee’s chain of title or in a recorded instrument that would put a reasonably
prudent attorney on notice of the restrictive covenant when performing a title
search:
[W]e hold that Bishop is only applicable under two
circumstances: first, where the remainder of the
grantor’s property is restricted in a deed of conveyance in
such a manner that the restriction runs with the land; and
-12-second, that a subdivision plat, a deed of restrictions, or
some other instrument of record is filed that would place
an ordinary and reasonably prudent attorney performing a
title search on notice of the restrictions in question. To
the extent that Bishop allows a restriction placed in a
collateral chain of title to bind a subsequent grantee in
the absence of a recorded subdivision plat or deed of
restrictions, it is overruled. In the future, restrictive
covenants will be enforced under Kentucky law only
when the restriction is placed in a recorded instrument,
actual notice of a purported restriction notwithstanding.
Oliver, 885 S.W.2d at 701. Thus, the Oliver Court substantially narrowed the
application of reciprocal negative easements.
Thereafter, in Black v. Birner, 179 S.W.3d 873, 878 (Ky. App. 2005),
the Court of Appeals explained that there are generally three types of reciprocal
covenants:
(1) those created by a developer at the time the land in
question is being subdivided; (2) those imposed by a
grantor when selling a portion of his or her land; and (3)
those agreed upon by owners of adjoining lands for their
mutual benefit.
Relevant herein is the first type of covenant discussed in Black.
Under the first type, the restrictive covenant is created to carry out a general
scheme to divide property for developmental purposes, such as a subdivision, and a
uniform restrictive covenant is included in every individual deed to lots therein or
is included in a recorded deed of restrictions or plat:
The first class consists of those “which are entered
into with the design to carry out a general scheme for the
-13-improvement or development of real property.” In this
class, “an owner of a large plot or tract of land divides it
into building lots, to be sold to different purchasers for
separate occupancy, by deeds which contain uniform
covenants restricting the use which the several grantees
may make of their premises.”
More recently, developers have adopted the
practice of setting out the covenants in a single
declaration that is recorded against the lots in the
development before any conveyances are made. The
declaration is then incorporated by reference in
subsequent deeds to various lots.
“In such cases the covenant is enforceable by any
grantee as against any other, upon the theory that there is
a mutuality of covenant and consideration, which binds
each and gives to each the appropriate remedy.” This
type of covenant is enforceable by and against
subsequent purchasers.
Id. at 878-79 (citations and footnotes omitted) (quoting Korn v. Campbell, 85 N.E.
687, 689 (1908)).
Viewing the facts most favorable to the Steeles, the restrictive
covenant prohibiting commercial use was not included in SRH’s deed or chain of
title and was not found in a recorded deed of restrictions or subdivision plat. In
fact, the restrictive covenant was not included in the deeds and chains of title to
five lots in the subdivision. The subdivision plat did include a lot with the word
“commercial” written on it; however, there was no specific restriction placed upon
any lot by the subdivision plat, includes those owned by SRH. A reasonable
-14-attorney would not have been put on notice that any lot within the subdivision was
restricted in use by reviewing the subdivision plat. See Oliver, 885 S.W.2d at 701.
In order to establish a reciprocal negative easement, a recorded instrument
evidencing the restrictive covenant must be placed in the grantee’s chain of title.
See id. at 701. Here, no such recorded instrument exists. Therefore, we conclude
that the lots owned by SRH were not burdened by the restrictive covenant
prohibiting commercial uses and that SRH was entitled to summary judgment.
APPEAL NO. 2025-CA-1011-MR
SRH asserts that the circuit court improperly rendered summary
judgment dismissing its claim of abuse of process. SRH claims that the Steeles
sent SRH a letter dated May 23, 2023. In the letter, SRH recounted that the Steeles
demanded that SRH cease the short-terms rentals as it violated the restrictive
covenant or legal proceedings would be instituted. SRH argues that the Steeles
sent the demand letter even though they knew the restrictive covenant was not in
the deed or chain of title to SRH’s lots. Citing to Sprint Communications Co., L.P.
v. Leggett, 307 S.W.3d 109, 114 (Ky. 2010), SRH maintains:
The Steeles’ May 23, 2023 letter mirrors the coercive
tactic condemned in Sprint. Like Sprint, the Steeles
invoked the authority of the courts as a lever to achieve a
result the law would not support: forcing SRH to
relinquish a lawful property use based on non-existent
restrictions. The threat was not a bona fide effort to
resolve a dispute and seek an outcome allowed by law,
but a calculated attempt to compel compliance with an
-15-extra-legal demand through fear of litigation expense and
reputational harm. The May 23, 2023, letter used the
specter of judicial process to secure a private, extralegal
objective.
SRH’s Brief at 8-9.
The tort of abuse of process is generally defined as the wrongful or
the irregular use of legal proceedings, and it has two elements – “1) an ulterior
purpose, and 2) a willful act in the use of the process not proper in the regular
conduct of the proceeding.” Leggett, 307 S.W.3d at 114. Kentucky courts
recognize that in committing the tort of abuse of process, one must intend to use
legal proceedings as a means to secure a collateral advantage:
[T]he gist of the tort [abuse of process] is not
commencing an action or causing process to issue
without justification, but misusing or misapplying
process justified in itself for an end other than that which
it was designed to accomplish. The purpose for which
the process is used, once it is issued, is the only thing of
importance. . . . The improper purpose usually takes the
form of coercion to obtain a collateral advantage, not
properly involved in the proceeding itself, such as the
surrender of property or the payment of money, by the
use of the process as a threat or a club. There is, in other
words, a form of extortion, and it is what is done in the
course of negotiation, rather than the issuance or any
formal use of the process itself, which constitutes the tort.
Leggett, 307 S.W.3d at 113 (quoting Flynn v. Songer, 399 S.W.2d 491, 494 (Ky.
1966)). Thus, to sustain a claim for abuse of process, “there must be use of the
process for an immediate purpose other than that for which it was designed and
-16-intended.” RESTATEMENT (SECOND) OF TORTS § 682 cmt. b (1977); see also
Garcia v. Whitaker, 400 S.W.3d 270, 277 (Ky. 2013).
Viewing the facts most favorable to SRH, the May 23, 2023, letter
merely set forth the Steeles’ legal position that SRH’s lots were burdened by the
restrictive covenant prohibiting commercial uses and that SRH was violating the
restrictive covenant by its short-term rentals. In the letter, the Steeles threatened
legal action if SRH did not comply and persisted in violating the restrictive
covenant. As SRH continued the short-term rentals, the Steeles filed the action
seeking injunctive relief to prohibit SRH from violating the restrictive covenant.
SRH’s claim for abuse of process fails because it did not demonstrate that the
Steeles acted with an ulterior purpose.
The record reflects that the Steeles initiated the civil action for the
purpose of enforcing the restrictive covenant against SRH and to enjoin SRH from
engaging in short-term rentals in violation thereof. The action may have ultimately
lacked merit, but the action was not initiated by the Steeles to obtain a collateral
advantage; rather, it was initiated to enforce an alleged restrictive covenant, which
is a legitimate underlying purpose for the legal action. Thus, we conclude that
SRH’s claim of abuse of process was properly dismissed by summary judgment.
For the foregoing reasons, Appeal No. 2025-CA-0192-MR and
Appeal No. 2025-CA-1011-MR are affirmed.
-17-ALL CONCUR.
BRIEFS FOR BRIEFS FOR
APPELLANTS/APPELLEES CHAD APPELLEE/APPELLANT SHR,
A. STEELE AND LINDY D. LLC:
STEELE:
Adam Futrell
Robert L. Prince Paducah, Kentucky
Benton, Kentucky
-18-