Design Committee Rebuked by Wyoming Court

In the case of Dwan v. Indian Springs Ranch Homeowners Association, Inc. 186 P.3d 1199 (Wyo. 2008), the Wyoming Supreme Court reversed a trial court's decision which had affirmed the Association's Design, Environment and Wildlife Committee ("DEW Committee"). The Supreme Court sent the case back to the trial court with instructions that the trial court compel approval of the proposed construction.

It's unusual for a court, particularly an appellate court to take such strong action against an architectural committee, but the facts of this case shed some light on why it did so. Additionally, the court included a very nice summary of the Wyoming Supreme Court's treatment of Covenants.

The case involved an owner, Ann Dwan, who had previously sought and obtained permission in 1998 to build a residence with a steeper pitched roof than was otherwise allowed by the DEW Committee. In 2003, she sought and obtained permission to build a guesthouse/garage structure, with a similar roof.

Apparently the composition of the DEW Committee, or at least the attitude of the committee changed sometime thereafter, because they responded to her 2006 application for an addition to her house with a denial. Not only did they deny her request, but as the Court put it, they "not only rejected Dwan's application but also indicated there was no possibility of successfully pursuing a variance as described in the CCRs".

Interestingly, the trial court had ruled in favor of the Association, holding that Ms. Dwan could not pursue her claim due to her failure to seek the variance. The Supreme Court rejected this argument, apparently based in part upon the discouragement by the DEW Committee, but more significantly based upon their finding that the committee's only basis for rejection -- noncompliance with the pitch requirements of the guidelines -- was unreasonable in light of their prior approvals of the home and accessory structure. The Court found it to be "particularly disingenuous for the DEW Committee and the Board to suggest that they do not have the authority to grant a variance for this application considering they granted two variances for her guesthouse/garage in June 2003..."

While the Court's action is unusual, the DEW Committee's denial is inexplicable. It simply would make no sense to require the addition to the home to have an 8/12 pitch, while the other portion of that same building, and the guesthouse/garage, had a 10/12 pitch. Her architect's opinion, submitted to the trial court, stated "the design of the existing house would be irreparably damaged by changing the roof pitch and would reflect badly on the quality of the subdivision."

As an aside, here's the Court's summary of the Wyoming Supreme Court's standards of review of covenants:

We treat restrictive covenants as contractual in nature and interpret them in accordance with the principles of contract law. McLain v. Anderson, 933 P.2d 468, 474 (Wyo.1997); Anderson [v. Bommer], 926 P.2d [959] at 961 [(Wyo. 1996)]; McHuron v. Grand Teton Lodge Co., 899 P.2d 38, 40 (Wyo.1995). Most importantly, "[w]e 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." Anderson, 926 P.2d at 961. We ascertain the true intention of the parties by looking at the writings as a whole, construing them to effectuate the intent of the parties. Sierra Trading Post, Inc. v. Hinson, 996 P.2d 1144, 1148 (Wyo.2000) (citing Kindler v. Anderson, 433 P.2d 268, 270-271 (Wyo.1967)); McHuron, 899 P.2d at 41.

Whether language is ambiguous is a question subject to de novo review by this Court. Samuel [v. Zwerin], 868 P.2d [265] at 266 [(Wyo. 1994)]." Language is ambiguous if it contains a double meaning." Id. (citing McNeiley v. Ayres Jewelry Co., 855 P.2d 1242, 1244 (Wyo.1993) (citing Cliff & Co., Ltd. v. Anderson, 777 P.2d 595, 599 (Wyo.1989))). Restrictive covenant language that is clear and unambiguous is construed according to its plain and ordinary meaning without reference to attendant facts, circumstances or extrinsic evidence. McLain, 933 P.2d at 474 (citing American Holidays, Inc. v. Foxtail Owners Ass'n, 821 P.2d 577, 579 (Wyo.1991); Klutznick v. Thulin, 814 P.2d 1267, 1270 (Wyo.1991); Knadler v. Adams, 661 P.2d 1052, 1053 (Wyo.1983)). Restrictions upon the use of land are not favored, will not be extended by implication and, when in doubt, will be construed in favor of the free use of the land. Kindler, 433 P.2d at 271.

2008 Case Summary

I spent some time last weekend at the College of Community Association Lawyer's conference in Palm Springs, CA. I live-blogged the conference on this site's parent site, www.utahcondolaw.blogspot.com, but in case you missed it, here are some of the cases that led the pack:

The first case of the morning's discussion is Pacific Hills Homeowners Association v. Prun, a case involving an association's five-year long pursuit for the removal of a fence. The lawsuit came five years after the first letter; the unit owner defended based upon laches, and waiver.

Park Ridge Condominium Association, Inc. v. Callais involved an association that refused to produce records based upon a contention that the request was designed to harass; the production was required, and fees were awarded.

Ritter & Ritter, Inc. Pention and Profit Plan v. The Churchill Condominium Association, involved a dispute between a unit owner and an association, relating to required repairs to slab penetrations between units. The court reaffirmed the board's fiduciary duty, but then analyzed the decision on the business judgment rule. Judicial deference applied to the board, but not the association; the association owed a duty to the members, and the association had to repair the problem. In other words, the board was not liable for deciding not to make the safety repairs, but the association had a duty to make them.

Thompson v.Toll Dublin, LLC involved a builder's effort to force an association into arbitration in connection with its construction defect; the developer knew of the defects, resulting in fraud claims against the developer. The Court rejected the effort to force non-statutory claims into arbitration; the court also found the arbitration provisions to be unconscionable.

A California case, Treo @ Kettner Homeowners Association v. The Superior Court of San Diego County involved a condominium provision which purported to take away the unit owners' right to a jury trial in a construction defect case. The Court denied the enforceability of the provision, based upon the absence of meaningful negotiation in connection with the declaration's provisions.

An Arizona case, The Lofts at Fillmore Condominium Association v. Reliance Commercial Construction, Inc. held that a builder was liable for breach of the implied warranty of habitability, even where the seller was not the builder. The implied warranty arose between the builder and the ultimate buyer, even in the absence of contractual privity.

Lake Buckhorn Property Owners Association, Inc. v. Townsend involved architectural restrictions in a declaration which were supplemented by a more restrictive regulation respecting the size of a septic tank. The court restated the black letter law that an association's regulations which are inconsistent with a declaration are invalid.

Miller v. Savana Maintenance Association, Inc. is a fair housing case which affirms an association's right to insist upon medical records to substantiate a claimed handicap under the Fair Housing Act.

Chesler v. Conroy involved outrageous behavior among the residents of a three unit condominium; the parties clearly treated each other inappropriately; nonetheless, the court held that this particular case did not rise to a federal fair housing claim, based upon disability. The Court did reaffirm the potential, in appropriate cases, of a hostile environment fair housing claim.

Bloch v. Frischholz was a religious discrimination case; it involved a woman who challenged an association rule based upon its interference with her right to mount a mezuzah (a religious symbol) on her door, in a common hallway. The Court held that the religious discrimination prohibitions in the fair housing act does not require a religious accomodation, and facially neutral restrictions were permissible.