Star Valley Ranch Ass'n v. Daley

334 P.3d 1207

2014 WY 116

STAR VALLEY RANCH ASSOCIATION, Appellant (Defendant)

v.William DALEY, Trustee of the Daley Family Trust; Gerald Kittelson and Sara Kittelson, Trustees of the Kittelson Revocable Trust; Frank Goglio, and Bob Logan and Kathy Logan, Trustees of the Logan 1998 Revocable Trust, Appellees (Plaintiffs).

No. S–13–0244.

Supreme Court of Wyoming.

Sept. 17, 2014.

Representing Appellant: James K. Sanderson and Michael D. Allen, Sanderson Law Office, Afton, Wyoming. Argument by Mr. Sanderson.

Representing Appellees: Paula A. Fleck and Matthew W. Kim–Miller, Holland & Hart, LLP, Jackson, Wyoming. Argument by Mr. Kim–Miller.

Before BURKE, C.J., and HILL, KITE^* , DAVIS, and FOX, JJ.

Opinion

BURKE, Chief Justice.

[¶ 1] The Star Valley Ranch Association attempted to amend the restrictive covenants governing the Star Valley Ranch subdivision in Lincoln County, Wyoming. The Appellees, owners of property in the subdivision, filed suit in district court seeking to invalidate the amendments on the basis that the Association had not complied with the previous covenants' requirements for amendments. The district court granted summary judgment in favor of the Appellees. The Association appealed the district court's decision. We will affirm.

ISSUES

[¶ 2] The Association presents these issues:

1. Where more than 70% of the lot owners in the entire subdivision consented to amend the covenants, did the district court err in holding that the amended covenants were invalid as they pertained to Plats 1, 2, and 3 of the Star Valley Ranch Subdivision?

2. Did the district court err when it held that no legal impracticability occurred upon the Clerk's refusal to record the signatures of those who consented to the modification of the covenants?

3. Where the law of the case held that the original covenants are to be interpreted to apply only to the specific plats that were described in the covenants, did the district court err in holding the Appellees had standing to challenge the amended covenants in plats where they were not lot owners?

[¶ 3] The Appellees rephrase the issues:

1. Did the district court properly grant summary judgment in favor of the [Owners] because [the Association] failed to satisfy various requirements to amend and restate eleven separate sets of covenants as a single document?

2. Did the district court properly consider the entirety of the attempted global amendment and restatement of eleven sets of covenants and hold that the [Owners] have standing to challenge that amendment process?

FACTS

[¶ 4] Leisure Valley, Inc., a Nevada corporation, founded Star Valley Ranch, a subdivision in Lincoln County, Wyoming. Beginning in 1970, and ending in 1986, Leisure Valley planned and built out twenty-one plats within the boundaries of the subdivision. The subdivision now includes more than 2,000 lots.

[¶ 5] Leisure Valley drafted and recorded sets of covenants for eleven separate phases of the development, eventually covering all twenty-one plats. The covenants were recorded for the following plats in this chronological order:

Phase 1.	Plats 1 and 2, August 14, 1970;
	Phase 2.	Plat 20, August 19, 1970;
	Phase 3.	Plat 3, March 29, 1971;
	Phase 4.	Plats 4, 5, and 6, June 25, 1971;
Phase 5.	Plats 7 and 8, April 3, 1972;
	Phase 6.	Plats 9 and 10, March 23, 1976;
	Phase 7.	Plats 12, 13, and 14, August 15, 1977;
	Phase 8.	Plats 15 and 16, April 2, 1979;
	Phase 9.	Plats 17 and 18, March 7, 1980;
	Phase 10.	Plat 21, March 21, 1983; and
	Phase 11.	Plats 4, 11, and 22, February 20, 1986.

We will analyze specific language from the covenants in our discussion below. For now, we note generally that the covenants establish various use restrictions, such as a limitation to single family residential development. The restrictions and definitions are similar, but not identical, in all eleven sets of covenants. All contain provisions that the covenants may be amended by “a written agreement executed by seventy percent (70%) of the then record Lot Owners covered hereby ... placed on record in the Office of the County Recorder of Lincoln County.”

[¶ 6] Beginning in 2010, the Association mounted an effort to amend the eleven sets of covenants into a single, uniform set of covenants applicable to the entire subdivision. A committee was formed to survey owners in the subdivision about potential changes to the covenants, and to draft a new set of covenants based on that input. In September of 2010, copies of the proposed amended covenants were sent to all of the lot owners of record, along with a form to be returned signifying whether the lot owners “Approve” or “Do Not Approve” the amended covenants. The form included a signature line for the owner and lines for two witnesses, but the form did not require that the signatures be acknowledged or notarized.

[¶ 7] The Association received forms from 1,476 lot owners of record approving the amendments. In total, that represented 73% of all of the lot owners of record. However, only 60% of the owners in Plats 1 and 2, and only 63% of the owners in Plat 3, voted to approve the amendments.

[¶ 8] The Association considered that the amendments had been approved because more than 70% of the lot owners of record throughout the entire subdivision had voted to approve. In June of 2011, the Association attempted to file and record a copy of the amended covenants, along with the 1,476 signatures of the lot owners who had approved the amendments, in the county property records. The Lincoln County Clerk refused to record that document. As a substitute, the chairman of the Association's board of directors signed, and had notarized, an affidavit reciting that more than 70% of the lot owners had submitted the required consent to amend the covenants. The Lincoln County Clerk accepted this affidavit, along with the amended covenants, for filing and recordation.

[¶ 9] The Appellees challenged the validity of the amended covenants by filing suit in district court, seeking a declaration that the amended covenants were invalid, and an injunction prohibiting the Association from implementing and enforcing the amended covenants. In broad terms, the Appellees asserted that the eleven sets of covenants had to be amended separately, and that the Association had improperly aggregated the votes from all eleven sets of owners in order to calculate an approval rate greater than 70%. The Appellees also contended that all eleven sets of covenants required that amendments must be accomplished by “a written agreement executed by seventy percent (70%) of the then record Lot Owners covered hereby ... placed on record in the Office of the County Recorder of Lincoln County.” According to the Appellees, the affidavit signed by the chairman of the Association's board of directors did not constitute a written agreement executed by lot owners of record, and was therefore legally inadequate to effect the amendments to the covenants.

[¶ 10] The Appellees filed a motion for summary judgment, which the Association opposed. The district court ruled in favor of the Appellees and against the Association. This timely appeal followed.

STANDARD OF REVIEW

[¶ 11] We have said that the “propriety of granting a motion for summary judgment depends upon the correctness of the dual findings that there is no genuine issue as to any material fact and that the prevailing party is entitled to judgment as a matter of law.” Dwan v. Indian Springs Ranch Homeowners Ass'n, 2008 WY 74, ¶ 6, 186 P.3d 1199, 1201 (Wyo.2008) (citing W.R.C.P. 56(c) ). Summary judgment involves a purely legal determination, and accordingly, we undertake de novo review of the district court's decision. Glenn v. Union Pacific R.R. Co., 2008 WY 16, ¶ 6, 176 P.3d 640, 642 (Wyo.2008). “The facts are reviewed from the vantage point most favorable to the party opposing the motion, and we give that party the benefit of all favorable inferences that may fairly be drawn from the record.” Brumbaugh v. Mikelson Land Co., 2008 WY 66, ¶ 11, 185 P.3d 695, 701 (Wyo.2008).

DISCUSSION

[¶ 12] Restrictive covenants are contractual in nature, and are interpreted in accordance with the principles of contract law. Bedessem v. Cunningham, 2012 WY 36, ¶ 16, 272 P.3d 310, 313 (Wyo.2012) ; Stevens v. Elk Run Homeowners' Ass'n, 2004 WY 63, ¶ 12, 90 P.3d 1162, 1165–66 (Wyo.2004). It is well-established that:

We seek to determine and effectuate the intention of the parties, especially the grantor(s), as it may appear or be implied from the instrument itself. See American Holidays, Inc. v. Foxtail Owners Ass'n, 821 P.2d 577, 579 (Wyo.1991) ; Bowers Welding & Hotshot, Inc. v. Bromley, 699 P.2d 299, 303 (Wyo.1985) ; Kindler [v. Anderson, 433 P.2d 268,] 270–71 [ (Wyo.1967) ]. Intention of the parties is to be determined from the entire context of the instrument, and not from a single clause. American Holidays, at 579; Bowers Welding & Hotshot, at 303; Kindler, at 270–71. Where the language imposing the restriction(s) is clear and unambiguous, we construe it according to its plain and ordinary meaning without reference to attendant facts and circumstances or extrinsic evidence, and the rule of strict construction does not apply.... American Holidays, at 579; Kincheloe v. Milatzo, 678 P.2d 855, 859 (Wyo.1984) ; Kindler, at 271.

Anderson v. Bommer, 926 P.2d 959, 961–62 (Wyo.1996).

[¶ 13] We begin by examining the language in the eleven sets of covenants. The language pertaining to amendments is the same in all eleven:

All of the conditions, covenants and reservations set forth herein shall continue and remain in full force and effect at all times against said property and the Owners thereof, subject to the right of change or modification hereinafter provided until January 1, 1992, and shall as then in force be continued for a period of twenty years, and thereafter for successive periods of twenty years each without limitation, unless within the six months prior to January 1, 1992, or within the six months prior to the expiration of any successive twenty-year period

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