Arychuk v. STAR VALLEY ASSOCIATION, No. 97-330

• Decision Date: 28 February 2000
• Docket Number: No. 97-330, No. 98-116.
• Citation: 997 P.2d 472
• Parties: Victor ARYCHUK; Lillie Arychuk; Richard Asay; Dorothy Asay; Fritz Ashauer; Carolyn Ashauer; Robert Barngrover; Jean Barngrover; Ronald Bergener; Donna Bergener; Ronald Boulter; Richard Clark; Joleen Clark; Neal Colley; Judy Colley; John Coykendall; Fred Cobb; John Clay; John Cullitan; William Daley; Stanley Dennison; Anna Dennison; Donn Dunnigan; Donna Dunnigan; Karen Drennon; Richard Ellinghysen; Carolyn Ellinghysen; Colin Fay; Evelyn Fay; Frank Goglio; Cora Goglio; Ann Gordon; Jesse Griffin; Dorothy Griffin; Kent Harker; Helen Harker; Robert Henry; Robert Henry, Jr.; Frank Hill; Roy Holloway; Santina Holloway; George Jelazo; Carol Jelazo; Gerlad Kittleson; Sara Kittleson; Frank Krachid; Carolyn Krachid; Robert Lavery; Kenneth Lovett; Gloria Lovett; Leroy McNutt; Wanda McNutt; Ronald Mueller; Avery Neill; Florence Neill; Wayne Perkins; Dennis Perry; Leslie Perry; Lynn Porter; Pauling Porter; Kae Prisk; Eugene Root; Vera Root; James Skane; Laura Skane; Glenn Waggoner; Carmela Waggoner; Lou Vouzzo; and Connie Vouzzo, Appellants (Plaintiffs), v. STAR VALLEY ASSOCIATION, a Wyoming mutual benefit, non-profit corporation; Charles Gibbons; Harold Whitefoot; Vince Zimmer; Dean Radford; Vern Bloxham; and Roger Cox, Appellees (Defendants), and Leisure Valley, Inc., a Nevada corporation; and Star Valley Ranch R.V. Park, a Nevada limited partnership, Appellees (Real Parties in Interest). Star Valley Ranch Association, a nonprofit corporation; Charles Gibbons; Harold Whitefoot; Vince Zimmer; Dean Radford; Vern Bloxham; and Roger Cox, Appellants (Defendants), v. Victor Arychuk, et al., Appellees (Plaintiffs).
• Court: Wyoming Supreme Court

997 P.2d 472

Victor ARYCHUK; Lillie Arychuk; Richard Asay; Dorothy Asay; Fritz Ashauer; Carolyn Ashauer; Robert Barngrover; Jean Barngrover; Ronald Bergener; Donna Bergener; Ronald Boulter; Richard Clark; Joleen Clark; Neal Colley; Judy Colley; John Coykendall; Fred Cobb; John Clay; John Cullitan; William Daley; Stanley Dennison; Anna Dennison; Donn Dunnigan; Donna Dunnigan; Karen Drennon; Richard Ellinghysen; Carolyn Ellinghysen; Colin Fay; Evelyn Fay; Frank Goglio; Cora Goglio; Ann Gordon; Jesse Griffin; Dorothy Griffin; Kent Harker; Helen Harker; Robert Henry; Robert Henry, Jr.; Frank Hill; Roy Holloway; Santina Holloway; George Jelazo; Carol Jelazo; Gerlad Kittleson; Sara Kittleson; Frank Krachid; Carolyn Krachid; Robert Lavery; Kenneth Lovett; Gloria Lovett; Leroy McNutt; Wanda McNutt; Ronald Mueller; Avery Neill; Florence Neill; Wayne Perkins; Dennis Perry; Leslie Perry; Lynn Porter; Pauling Porter; Kae Prisk; Eugene Root; Vera Root; James Skane; Laura Skane; Glenn Waggoner; Carmela Waggoner; Lou Vouzzo; and Connie Vouzzo, Appellants (Plaintiffs), v. STAR VALLEY ASSOCIATION, a Wyoming mutual benefit, non-profit corporation; Charles Gibbons; Harold Whitefoot; Vince Zimmer; Dean Radford; Vern Bloxham; and Roger Cox, Appellees (Defendants), and Leisure Valley, Inc., a Nevada corporation; and Star Valley Ranch R.V. Park, a Nevada limited partnership, Appellees (Real Parties in Interest).

Star Valley Ranch Association, a nonprofit corporation; Charles Gibbons; Harold Whitefoot; Vince Zimmer; Dean Radford; Vern Bloxham; and Roger Cox, Appellants (Defendants), v. Victor Arychuk, et al., Appellees (Plaintiffs).

Nos. 97-330, 98-116.

Supreme Court of Wyoming.

February 28, 2000.

Representing Victor Arychuk, et al.: Robert J. Logan, San Jose, California.

Representing Star Valley Ranch Association, et al.: David F. Palmerlee of Palmerlee & Durrant, Buffalo, Wyoming; and William H. Stoddard, of Albright, Stoddard, Warnick & Albright, Las Vegas, Nevada.

Before LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and TAYLOR,¹ JJ.

THOMAS, Justice.

The issues presented by the parties in these consolidated cases arise out of the claim of the Arychuk group, some of the owners of property in Star Valley Ranch, a recreational subdivision in Lincoln County, that their rights under a Declaration of Covenants, Conditions and Restrictions (Declaration) had been infringed. The Arychuk group alleged that the directors of the nonprofit corporation, the Star Valley Ranch Association (the Association), formed to provide and manage community services and recreational facilities for those who owned property in Star Valley Ranch, had conveyed property in the Common Area to Leisure Valley, Inc. (Leisure Valley), the developer of Star Valley Ranch, in violation of the Declaration. The property consisted of the right granted to Leisure Valley to install nineteen three-quarter inch taps into the Association's water system, which was winnowed to six such taps by the time of the conclusion of the trial. In the related case that was consolidated, the Association complains of the failure of the district court to impose sanctions on the Arychuk group for violating the Wyoming Rules of Civil Procedure. The district court ruled that the directors of the Association were given the power under the Wyoming Nonprofit Corporation Act, Wyo. Stat. Ann. §§ 17-19-101 through XX-XX-XXXX (Lexis 1999), to make the agreement with Leisure Valley, and that the corporate power to do so was not limited by the Declaration. The district court dismissed the claims of the Arychuk group with prejudice. It refused to impose the sanctions sought by the Association. We affirm the Findings of Fact, Conclusions of Law, and Judgment entered in the district court, but on a more limited premise than the rationale invoked by the district court. We also affirm the denial of the sanctions sought by the Association.

In the case identified as No. 97-330, this Statement of the Issues is found in the Appellants' Opening Brief, filed on behalf of the Arychuk group:

1. Did the District Court err in concluding that the Star Valley Ranch Association, as legal owner of common area in a common interest subdivision, was not restricted by the declaration of covenants, conditions and restrictions in dedicating, transferring or otherwise encumbering that common area?

2. Did the District Court err in concluding that Leisure Valley Inc., had an easement of enjoyment in the Star Valley Ranch common area that could be used to benefit property not part of the Star Valley Ranch or for persons not members of the Star Valley Ranch Association?

This Statement of Issues is found in the Joint Brief of Appellee Defendants and Appellee Real Parties in Interest, filed on behalf of the Association and Leisure Valley:

Appellants' contention is that the Association did not have the corporate authority to agree to allow Leisure Valley to use the Association water system to deliver water to four 3/4" water taps to be provided to Leisure Valley in accordance with Paragraph 7.B.i of the MOA [Memorandum of Agreement]. Appellants contend that:

1. The Association's express corporate powers under the Wyoming Nonprofit Corporation Act and Article III of the Association Articles of Incorporation are impliedly restricted by Article V, Section 1(e) of the DCC & Rs [Declaration of Covenants, Conditions and Restrictions] to the extent that the Association did not have the authority to agree to allow Leisure Valley's use of the Association water system to deliver water to the four water taps is in accordance with Paragraph 7.B.i.

2. The Declarant's (Leisure Valley) easement of enjoyment in the Association water system expressly reserved in Article V, Section 1 of the DCC & Rs from which Leisure Valley can reserve use of the Association water system to deliver water to the four taps is impliedly voided by a "broader scheme of development" in the DCC & Rs.

3. The owners' easement of enjoyment, expressly in favor of Leisure Valley and the members in accordance with Article V, Section 1 of the DCC & Rs, is impliedly an exclusive easement of enjoyment for the benefit of the members only, impliedly excluding use of the Association water system by Leisure Valley to deliver water to the four taps.

4. The Declarant's express easement of enjoyment in Article V, Section 1 is impliedly voided because it is appurtenant to and can only be used for the benefit of the several lots in Star Valley Ranch owned by Leisure Valley.

The District Court disagreed with Appellants' contentions. The issues are whether the District Court correctly concluded:

3. The Association, acting through its Board of Directors, may exercise the powers set forth in Article III of the Articles of Incorporation of Star Valley Ranch Association * * *.

5. The Association, acting through its Board of Directors, may exercise the powers set forth in W.S. § 17-19-302 of the Wyoming Nonprofit Corporation Act.

6. The Wyoming Nonprofit Corporation Act (at W.S. § 17-19-301(a) and 302) does not prohibit the Association from using common area to provide services to nonmembers or to lands not within the Star Valley Ranch.

7. The Articles of Incorporation of the Association do not prohibit the Association from using Association "common area" property to serve land lying outside the Star Valley Ranch or for the benefit of persons who are not members of the Association.

11. By providing taps to lands lying outside the Star Valley Ranch in accordance with the MOA, the Association is:

a) taking action which will ensure that community water services will be supplied to the members of the Star Valley Ranch.

b) acting for the general benefit and welfare of the members of the Star Valley Ranch.

12. Providing 6 water taps to Leisure Valley in accordance with the MOA in return for all of Leisure Valley's right, title and interest, including the surrender of Leisure Valley's easement of enjoyment in the Association water system, fulfills the specific and primary purpose of the Association.

13. The Association's Board of Directors has the power and authority to enter into the MOA.

14. By executing and fulfilling the MOA, the Association is providing for the general use of the Association water system by the members of the Association.

15. The MOA is clearly to the benefit and welfare of the members of the Association, having eliminated all competing rights of use claimed by Leisure Valley in the Association water system.

28. Leisure Valley, as the declarant, owns an easement of enjoyment in the Association common area, including in the Association water system.

33. The members' easement of enjoyment is not exclusive, either in relation to Leisure Valley or in relation to the Association.

42. The DCC & Rs do not prohibit Leisure Valley from exercising Leisure Valley's easement of enjoyment in the common area for the benefit of property located outside of the Star Valley Ranch or for the benefit of persons who are not members of the Association.

45. The Association can make, or allow, any use of the common area, including the Association water system that does not "unreasonably interfere" with the owners' easement of enjoyment. * * *

46. The Association's use of the Association water system to serve Leisure Valley's forty (40) acres and unrecorded Plat 16A in accordance with the MOA is not unreasonable; to the contrary, it is reasonable under the circumstances of this case. * * *

(Emphasis in original.) This statement of issues is articulated in the Appellants' Reply Brief:

I. Appellees' factual assertions presume critical facts that are not supported by evidence or the district court[']s opinion.

1. Appellees make incorrect assumptions about use of the Association water system.

2. Appellees make incorrect assumptions about the Association's power to transfer property free of encumbrances.

3. Although ownership of the property and appurtenances that became common area was vested in the

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