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Friends of Tuhaye, LLC v. Tuhaye Homeowners Association

United States District Court, D. Utah, Central Division

June 7, 2017

FRIENDS OF TUHAYE, LLC, a Delaware limited liability company, Plaintiff,
v.
TUHAYE HOMEOWNERS ASSOCIATION, a Utah non-profit organization, Defendant.

          MEMORANDUM DECISION AND ORDER GRANTING [65] DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          David Nuffer United States District Judge.

         BACKGROUND

         Defendant Tuhaye Homeowners Association (“Tuhaye HOA”), the homeowners' association for Tuhaye, a planned community in Kamas, Utah (the “Tuhaye Development”), has moved for summary judgment against plaintiff Friends of Tuhaye, LLC (“Friends of Tuhaye”), a developer that has owned eight lots within the Tuhaye Development relevant to this action. All of the lots owned by Friends of Tuhaye at the Tuhaye Development were organized into a distinct sub-community called Christopher Communities at Tuhaye (the “Christopher Development”), which is within and subject to the Tuhaye Development. Tuhaye HOA contends that it was authorized under the Declaration of Covenants, Conditions and Restrictions for the Tuhaye Development (the “Master Covenants”) to backfill foundations on the Christopher Development lots to abate conditions it concluded were a hazardous and unsightly nuisance. Friends of Tuhaye contends that the Tuhaye HOA is liable for trespass and other claims for relief because the lots within the Christopher Development were not subject to Assessments or Assessment Liens under the Master Covenants as long as those lots were owned by Friends of Tuhaye, a self-described “sub-declarant, ” rather than a third-party resident.

         Tuhaye HOA filed a motion for summary judgment on its counterclaims, as well as Friends of Tuhaye's claims (the “Motion”).[1] Tuhaye HOA seeks summary judgment on each of its claims, which include declaratory relief, breach of contract, lien foreclosure, and indemnification for attorneys' fees and costs.[2] Tuhaye HOA also seeks dismissal of each of Friends of Tuhaye's claims, which include mandatory injunction, trespass, slander of title, declaratory relief, and breach of the covenant of good faith and fair dealing.[3] Friends of Tuhaye filed an opposition to the Motion (the “FOT Opposition”).[4]

         JRAT Investments, LLC (“JRAT”), which intervened in the action based on its purchase of six of the eight lots at issue in the case, also opposed the Motion.[5] JRAT has asserted claims against Friends of Tuhaye for breach of contract, fraud, and injunctive and declaratory relief related to the purchase. Tuhaye HOA has cross-claimed against JRAT for breach of contract and lien foreclosure. These stated claims by and against JRAT were not raised in the Motion and are not resolved by this Memorandum Decision and Order.

         Because the undisputed facts show that Friends of Tuhaye and its Christopher Development are indeed subject to the Master Covenants, including nuisance prohibitions and Assessments, as a matter of law, and because Tuhaye HOA acted within its rights and authority in abating the nuisance at the Christopher Development, the Motion is fully GRANTED in favor of defendant Tuhaye HOA.

         Table of Contents

         BACKGROUND ............................................................................................................................ 1

         UNDISPUTED MATERIAL FACTS ............................................................................................ 4

         STANDARD OF REVIEW .......................................................................................................... 13

         DISCUSSION ............................................................................................................................... 14

         The Tuhaye HOA Is Entitled to Summary Judgment on the Competing Claims for Declaratory Relief Concerning Whether Friends of Tuhaye Violated the Master Covenants .............................................................................................................. 14

         Friends of Tuhaye Is Subject to the Master Covenants of the Tuhaye Development. . ........................................................................................... 14

         Tuhaye HOA Acted within Its Authority by Abating Nuisance on the Christopher Development Lots and Assessing the Cost to Friends of Tuhaye. . ........... 17

         Each of Friends of Tuhaye's Other Claims Are Properly Dismissed. . ............................. 20

         The Trespass Claim Must Be Dismissed. . ............................................................. 20

         The Slander of Title Claim Must Be Dismissed. . .................................................. 20

         The Mandatory Injunction Claim Is Denied. . ....................................................... 21

         The Breach of the Covenant of Good Faith and Fair Dealing Claim Must Be Dismissed. . ................................................................................................ 21

         Summary Judgment on Each of Tuhaye HOA's Other Counterclaims Must Be Granted.22

         Summary Judgment on the Breach of Contract Claim Is Granted. . ..................... 22

         Summary Judgment on the Lien Foreclosure Claim Is Granted. . ........................ 22

         Attorneys' Fees and Costs Are Awarded. . ............................................................ 23

         The Claims by and against JRAT Investments Are Not Resolved by the Motion. . ......... 23

         CONCLUSION ............................................................................................................................. 24

         ORDER ......................................................................................................................................... 25

         UNDISPUTED MATERIAL FACTS[6]

         1. [Tuhaye HOA] is a Utah non-profit corporation and is the “master” association over other sub-associations within its boundaries.[7]

         2. [The Tuhaye Development] was created by [the Master Covenants] recorded against all parcels and lots within the Tuhaye community in the Wasatch County Recorder's Office on June 4, 2003 at Entry No. 258750.[8]

         3. [Friends of Tuhaye] is a Nevada-based residential developer that developed [the Christopher Community] as a sub-community within [the Tuhaye Development].[9]

         4. The Supplemental Annexation Declaration to the Declaration of Covenants, Conditions, and Restrictions and Reservation of Easements for Christopher Communities at Tuhaye (the “Christopher Covenants”) was recorded on all the lots owned by [Friends of Tuhaye] in the Wasatch County Recorder's Office on November 15, 2007 at Entry No. 328618.[10]

         5. [The Christopher Development] is a community comprised of 46 lots. [The Christopher Development] has its own homeowners' association called Christopher Communities at Tuhaye Homeowners Association (“Christopher HOA”).[11]

         6. The lots that are the subject of this action (the “Subject Properties”) are identified on the Christopher Communities at Tuhaye POD B Subdivision Plat, recorded in the Wasatch County Recorder's Office on October 7, 2005 at Entry No. 290057 (“Christopher Plat”), and are known as follows:

• 3160 E. Arrowhead Trail (Lot 1);
• 3136 E. Arrowhead Trail (Lot 2);
• 3134 E. Arrowhead Trail (Lot 3);
• 3130 E. Arrowhead Trail (Lot 4);
• 3121 E. Arrowhead Trail (Lot 9);
• 3123 E. Arrowhead Trail (Lot 10);
• 3210 E. Broken Spear Trail (Lot 15), and
• 3226 E. Broken Spear Trail (Lot 18).[12]

         7. General Plat Notes #1 on the Christopher Plat states:

The Master Association is responsible for the operation and maintenance of the property throughout the Tuhaye Development pursuant to the Master Declaration and for the governance of all of the Owners in the Tuhaye Development pursuant to the Bylaws and Articles for the Master Association. The Sub-Association is created for the purpose of sharing certain Common Areas and receiving benefits or services which are not provided to all Residences in the Tuhaye Development ..... Each Association shall be responsible for enforcement of their respective Governing Documents pursuant to separate Boards of Directors. Each Owner in Christopher Communities shall be a member of the Master Association and the Sub-Association and shall have the rights appurtenant to each Association.[13]

         8. General Plat Notes #2 on the Christopher Plat states:

The Residence [sic] (which include a Lot and a single family attached or detached home) and the Common Areas are covered by a Master Declaration of Covenants, Conditions and Restrictions for Tuhaye (the “Master Declaration”), and by a Subordinate Declaration of Covenants, Condition and Restrictions for Christopher Communities (the “Sub Declaration”). Each Owner of a Residence will be a member of both the Tuhaye Home Owners Association (the “Master Association”) and the Christopher Communities at Tuhaye Home Owners Association (the “Sub Association”).[14]

         9. General Plat Notes #13 on the [Christopher Plat] states, “All of the Property on this Plat is subject to the Declaration of Covenants, Conditions and Restrictions for Tuhaye (the “Master Declaration”).”[15]

         10. Recital “E” of the [Christopher Covenants] states: “The POD B Additional Land, the Residences to be built thereon and the Owners of such Residences are also subject to that certain master Declaration of Covenants, Conditions and Restrictions for TUHAYE, A PLANNED COMMUNITY [the Master Covenants], recorded in the Office of the County Recorder of Wasatch County, Utah, in June 4, 2003, as Instrument No. 258750 in Book 0628.”[16]

         11. Paragraph 2 of the [Christopher Covenants] states: “The POD B Additional land and Residences to be built thereon are hereby made subject to the Master Declaration; and to the extent that any of the provisions contained herein conflict with provisions of the [Master Covenants], the [Master Covenants] shall control.”[17]

         12. The Utah Public Offering Statement for the [Christopher Development], which was created by [Friends of Tuhaye] in August 2005 (the “Public Offering Statement”), states:

The Subdivision is also subject to all the applicable provisions of the TUHAYE HOME OWNERS ASSOCIATION, INC., a Utah nonprofit corporation (the “Master Association”), the Master Association articles of incorporation, bylaws, rules and regulations, design criteria or other documents or requirements, all set forth in the Master Declaration and the Master Association bylaws, as the same may be duly supplemented, amended or modified from time to time . . . each Lot owner will also be a member of the Master Association, and will be entitled to all the benefits, and subject to the obligations (including the obligation to pay Master Association assessments, transfer fees, and any other amounts which may be assessed under the Master Declaration) arising from such membership. Purchasers of Lots in the Subdivision should make their own independent inquiry into the requirements of the Master Association . . . the Master Association will levy assessments against each Lot for the purpose of financing the maintenance of the Master Association common areas and other Master Association functions and obligations, which assessments are subject to increase in accordance with the Master Declaration. If the Master Association assessments are not timely paid, the Master Association will have the right to enforce payment by legal action or by foreclosing upon the Lot.[18]

         13. [Tuhaye HOA] is directed and managed by a Board of Directors.[19]

         14. The Architectural Review Committee (“ARC”) is the body-appointed by the Board-that is responsible for promulgating rules, regulations and guidelines regarding construction activities, and enforcing such rules and the provisions of the [Master Covenants] pertaining to construction activities on the lots.[20]

         15. From approximately July 2005 up and until December of 2008, [Friends of Tuhaye] constructed and sold residential homes within [the Christopher Development].[21]

         16. Between approximately October 2007 and October 2008, [Friends of Tuhaye] poured concrete-form foundations for all eight (8) of the residential lots on the Subject Properties.[22]

         17. In or around December of 2008, after [Friends of Tuhaye] poured the concrete foundations on the Subject Properties, all construction thereon halted.[23]

         18. From December of 2008 to the Fall of 2012, the concrete foundations on the Subject Properties sat dormant, wherein concrete and rebar was exposed [].[24]

         19. Section 3.4 of the [Master Covenants] states:

Each Owner of a Lot or Parcel shall properly maintain and keep properly cultivated, and free of trash, weeds and other unsightly material, all shrubs, trees, hedges, grass and plantings of every kind (collectively, Landscaping) located on: (a) his, her or its Lot or Parcel. … Notwithstanding anything to the contrary herein, portions of the Lot or Parcel may be maintained with natural ground cover and growth as permitted by the Architectural Review Committee.[25]

         20. Section 3.5 of the [Master Covenants] states:

No other nuisance shall be permitted to exist or operate upon or adjacent to any Lot, Parcel or other property so as to be offensive or detrimental to any other property in the vicinity thereof or to its occupants . . .The Architectural Review Committee in its sole discretion shall have the right to determine the existence of any such nuisance. The provisions of this Section shall not apply to construction activities of Declarant.[26]

         21. Section 3.7 of the [Master Covenants] states:

No Residence, building, structure or other Improvement on any Lot, Parcel or other property shall be permitted to fall into disrepair and each such Residence, building, structure and other Improvement shall at all times be kept in good condition and repair and adequately painted or otherwise finished.[27]

         22. Section 7.5 of the [Master Covenants] states:

In the event any portion of any Lot or Parcel is so maintained as to present a public or private nuisance, or as to substantially detract from the appearance or quality of the surrounding Lots and Parcels or other areas of the Project which are substantially affected thereby or related thereto, or in the event any portion of the Lot or Parcel is being used in a manner which violates this Declaration, or in the event any Owner of any Lot or Parcel is failing to perform any of its obligations under the Project Documents, the Board may make a finding to such effect, specifying the particular condition or conditions that exist, and pursuant thereto give notice thereof to the offending Owner that unless corrective action is taken within fourteen (14) days, the Board may cause such action to be taken at said Owner's cost. If at the expiration of said 14-day period the requisite corrective action has not been taken, the Board shall be authorized and empowered to cause such corrective action as it deems appropriate to be taken and the cost thereof shall be added to and become a part of the Assessment to which the offending Owner and the Owner's Lot or Parcel is subject and shall be secured by the Assessment Lien.[28]

         23. On August 6, 2009, the [Christopher HOA]-of which Ken Sailley was the president-held its annual meeting during which the following was documented in meeting minutes:

Christopher Homes has some foundations that were built in projection of anticipated start date. There are some concerns regarding the unsightliness of the foundations. Christopher Homes originally was going to install a fence around the foundation. They are now planning on cutting down the pipes, bring down the straps, weeding, bringing in top soil. No irrigation will be installed as it is a temporary fix.[29]

         24. On April 20, 2012, the Tuhaye Board of Directors held a board meeting during which the directors discussed [Friends of Tuhaye's] exposed foundations as a violation of the governing documents, and stated that the [Tuhaye HOA] would resign as [the Christopher Development's] property manager.[30]

         25. On June 5, 2012, the Tuhaye Board of Directors sent a FedEx envelope to Ken Sailley of [Friends of Tuhaye] containing Notice of Immediate Enforcement letters dated May 11, 2012 and June 5, 2012, informing him that [Friends of Tuhaye's] exposed and unfinished foundations were a violation of the Governing Documents.[31]

         26. On July 18, 2012, the Tuhaye Board of Directors held a meeting during which the Board discussed that Ken Sailley of [Friends of Tuhaye] had not responded to any of the enforcement letters sent by the board, and that the [Tuhaye HOA] would resign as [the Christopher Development's] manager effective August 6, 2012.[32]

         27. On July 30, 2012, Louise Redfern, an Owner within the [Christopher Development], sent a letter with pictures complaining of the safety hazard caused by the exposed foundations to the Wasatch County Fire District and the Wasatch County Building Office, and she copied Ken Sailley of [Friends of Tuhaye].[33]

         28. David Eigen, who lives next to one or more of the exposed foundations, complained of the attractive nuisance that the exposed foundations posed to his young sons, and he communicated this to the [Christopher Development] representatives. . . . Mr. Eigen complained to the [board of the Tuhaye HOA] of the problem the exposed foundations posed.[34]

         29. Jim Wolf, also an owner within the [Christopher Development], complained to [the Christopher HOA] of the safety hazard caused by the exposed foundations as well, and [] complained to the [board of the Tuhaye HOA].[35]

         30. On September 10, 2012, [Tuhaye HOA's] legal counsel, on behalf of the board of directors and the ARC, sent a letter to Ken Sailley of [the Christopher HOA] stating that (a) the Board and ARC deemed the exposed and unfinished foundations a “nuisance” pursuant to Article 7, Section 7.5 of the [Master Covenants], (b) the Tuhaye Board and the ARC had determined that the most reasonable way to abate the nuisance was to cover the exposed foundations with quality top ...


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