Coll. BOOK Ctr.S INC. v. CAREFREE FOOTHILLS HOMEOWNERS' Ass'n

• Decision Date: 26 October 2010
• Docket Number: No. 1 CA-CV 08-0450.,1 CA-CV 08-0450.
• Citation: 225 Ariz. 533,241 P.3d 897
• Parties: COLLEGE BOOK CENTERS, INC., 401 Profit Sharing Plan and Trustee, a Trust dated October 14, 1994 with Trustee David B. Vanyo, Plaintiffs/Appellees, v. CAREFREE FOOTHILLS HOMEOWNERS' ASSOCIATION; John P. Dwyer, Jr., and Janet G. Dwyer, husband and wife, Defendants/Appellants.
• Court: Arizona Court of Appeals

225 Ariz. 533

241 P.3d 897

COLLEGE BOOK CENTERS, INC., 401 Profit Sharing Plan and Trustee, a Trust dated October 14, 1994 with Trustee David B. Vanyo, Plaintiffs/Appellees,

v.CAREFREE FOOTHILLS HOMEOWNERS' ASSOCIATION; John P. Dwyer, Jr., and Janet G. Dwyer, husband and wife, Defendants/Appellants.

No. 1 CA-CV 08-0450.

Court of Appeals of Arizona,Division 1, Department B.

Oct. 26, 2010.

COPYRIGHT MATERIAL OMITTED.

Gallagher & Kennedy, P.A. By Jeffrey D. Gross, Phoenix, Attorneys for Plaintiffs/Appellees.

Meagher & Geer, P.L.L.P. By Thomas H. Crouch and Kevin T. Minchey, Scottsdale, Attorneys for Defendants/Appellants.

OPINION

BROWN, Judge.

¶ 1 Defendant Carefree Foothills Homeowners' Association (the “HOA”) appeals a jury verdict in favor of plaintiff David Vanyo, as trustee for College Book Centers, Inc., 401 Profit Sharing Plan (“Vanyo”). The HOA argues that the trial court erred in denying its motions for judgment as a matter of law (“JMOL”) as to all three of Vanyo's claims: (1) whether the HOA waived a provision of the Declaration of Covenants, Conditions, and Restrictions (“CC&Rs”) prohibiting non-residential structures; (2) whether Vanyo proved he acquired an implied way of necessity, and (3) whether Vanyo established he could utilize Arizona's private way of necessity statute ¹ to negate a provision of the CC&Rs prohibiting non-residential structures. For the following reasons, we reverse the court's denial of the HOA's motion for JMOL on Vanyo's waiver and implied way of necessity claims and remand for further proceedings on his claim for private condemnation.

BACKGROUND

¶ 2 Carefree Foothills is a residential subdivision consisting of seventy-six lots. Each lot is subject to the CC&Rs, which include a provision prohibiting non-residential structures, and each lot owner is subject to mandatory membership in the HOA. An architectural control committee is responsible for approving the construction of any building or structure to be placed on the lots. The CC&Rs further provide that the failure to enforce any provision will not result in subsequent waiver or abandonment of the right to enforce such restriction in the future.

¶ 3 Lot 24 is undeveloped and is located on a cul-de-sac street. Adjacent to the eastern border of Lot 24 is a nine-acre rectangular parcel known as the Mamie Maude Mining Claim (“Mamie Maude”), which is not part of Carefree Foothills. Together with three other mining claims, Mamie Maude was originally transferred to private ownership in 1912 when the U.S. government granted a land patent. At the time of the conveyance, federal land surrounded the four mining claims. The mining claims at one point were allegedly accessible by Sentinel Rock Road, which is located just to the north of Mamie Maude in its current configuration.

¶ 4 A steep slope divides Mamie Maude into two areas: the elevated northern portion is sufficient for one large home site and the lower southern portion has adequate space to build four homes on one-acre lots. Because of the steep grade, it is not feasible to safely build a road connecting the two portions of Mamie Maude. Sentinel Rock Road currently provides access to a planned development north of Mamie Maude, but it does not provide legal access to Mamie Maude.

¶ 5 Vanyo's predecessors-in-interest submitted a plan to the HOA to build a roadway across Lot 24 to develop four lots on Mamie Maude's lower portion. The HOA rejected the request, explaining that allowing construction of a roadway would violate the restriction that prohibits non-residential structures. ²

¶ 6 In March 2005, Vanyo purchased Lot 24 and Mamie Maude. He later asserted he was unaware of access problems at the time he agreed to buy the properties. He admitted, however, that during a five-month due diligence period before close of escrow, he became aware Lot 24 was subject to CC&Rs prohibiting a roadway and that developing Mamie Maude would be difficult. During that time period, the developer of a subdivision to the north of Mamie Maude advised Vanyo that he could potentially purchase an easement along Sentinel Rock Road to access Mamie Maude. Following close of escrow, Vanyo submitted a proposal to build a roadway across Lot 24, which the HOA rejected in November 2005.

¶ 7 In August 2006, Vanyo sued the HOA and Carefree Foothills lot owners as a class, naming the HOA as class representative. ³ In his complaint, he alleged generally that the HOA's denial of his request to construct a roadway across Lot 24 prevented him from accessing Mamie Maude. Vanyo sought a declaratory judgment: (1) that the HOA waived the restriction prohibiting non-residential structures by explicitly or implicitly approving two other roadways within the subdivision; and (2) that Vanyo was entitled to an implied way of necessity across Lot 24. Alternatively, Vanyo alleged he was entitled to obtain a statutory private way of necessity across Lot 24. Specifically, he sought to obtain an easement across Lot 24 by condemning the lot owners' interest in the CC&R provision that prohibits non-residential structures. During the course of the litigation, both parties unsuccessfully moved for summary judgment.

¶ 8 All three claims were tried to a jury, which found in favor of Vanyo on his claim that the HOA waived its ability to enforce the CC&R provision. The jurors did not decide Vanyo's implied way of necessity and private condemnation claims because the special verdict form instructed them not to continue if they found in his favor on the waiver claim. The trial court later awarded $100,000 in attorneys' fees to Vanyo. The HOA then renewed its motions for JMOL on all three claims and alternatively requested a new trial based on the jury instruction on waiver. The court denied the motions and this timely appeal followed.

DISCUSSION

[1] [2] [3] ¶ 9 We review de novo whether a trial court should have granted a motion for JMOL. Aegis of Ariz., L.L.C. v. Town of Marana, 206 Ariz. 557, 566, ¶ 34, 81 P.3d 1016, 1025 (App.2003). A court properly grants JMOL “only if the facts presented in support of a claim have so little probative value that reasonable people could not find for the claimant.” Shoen v. Shoen, 191 Ariz. 64, 65, 952 P.2d 302, 303 (App.1997). In making this determination, we view “the evidence in a light most favorable to upholding the jury verdict” and will affirm “if any substantial evidence exists permitting reasonable persons to reach such a result.” Hutcherson v. City of Phoenix, 192 Ariz. 51, 53, ¶ 13, 961 P.2d 449, 451 (1998).

I. Waiver

¶ 10 The HOA argues that the court erred in denying its motion for JMOL and allowing the jury to render a verdict on Vanyo's waiver claim. The HOA contends that it never approved similar CC&R violations, and even if it did, the non-waiver provision in the CC&Rs bars Vanyo's waiver claim. ⁴

[4] [5] ¶ 11 Restrictive covenants are a “contract between the subdivision's property owners as a whole and individual lot owners.” Ahwatukee Custom Estates Mgmt. Ass'n, Inc. v. Turner, 196 Ariz. 631, 634, ¶ 5, 2 P.3d 1276, 1279 (App.2000). We interpret restrictive covenants in accordance with the Restatement (Third) of Property: Servitudes § 4.1(1) (2000), which gives effect to the intention of the parties as determined from the language, as well as the circumstances and purposes relating to its creation. Powell v. Washburn, 211 Ariz. 553, 556-57, ¶ 13, 125 P.3d 373, 376-77 (2006). The interpretation of a restrictive covenant is generally a matter of law, which we review de novo. Id. at 555-56, ¶ 8, 125 P.3d at 375-76.

[6] ¶ 12 As Vanyo does not dispute that his proposed roadway is a non-residential structure that would violate the CC&Rs, the HOA has the right to prevent the roadway. See Whitaker v. Holmes, 74 Ariz. 30, 32, 243 P.2d 462, 463 (1952) (noting that courts are bound to require compliance with restrictive covenants if they are not contrary to law and are unambiguous); Continental Oil Co. v. Fennemore, 38 Ariz. 277, 281, 299 P. 132, 133 (1931) (holding that when deed restrictions provide for the uses for which land may be used, the restrictions may be enforced in equity). However, in the absence of a non-waiver provision, a homeowners' association or an affected lot owner may waive the right to enforce particular restrictive covenants. See Burke v. Voicestream Wireless Corp. II, 207 Ariz. 393, 398, ¶ 21, 87 P.3d 81, 86 (App.2004) (citing Riley v. Stoves, 22 Ariz.App. 223, 229-30, 526 P.2d 747, 753-54 (1974)) (noting that frequent violations may result in a waiver of ability to enforce a specific covenant). Thus, to establish waiver by the HOA, Vanyo was required to prove there were frequent violations of the CC&R provision prohibiting non-residential structures.

A. Frequency of Violations

¶ 13 At trial, Vanyo presented evidence in support of his claim that two similar CC&R violations had occurred on lots located within Carefree Foothills. The first violation evolved from the 1984 grant of an access easement across Lot 7 to a five-acre parcel outside of the subdivision. A roadway (the “Thiele roadway”) was later constructed on Lot 7 to allow access to the five-acre parcel, which like Mamie Maude, is currently zoned for one residence per acre. Nevertheless, only one home has been constructed on the parcel since Ralph Applegate, the developer of Carefree Foothills, granted the easement. At that time, Applegate unilaterally made all decisions regarding the subdivision because the HOA had not been formed.

¶ 14 The second violation arose from the 1987 grant of an easement for reciprocal ingress and egress among the then current owners of Lots 42 and 43, and Applegate, who owned Lot 44 at the time. A roadway (the “Applegate roadway”) crossing all three lots, which are now under common ownership, was constructed for the purpose of providing access to the residence located on Lot 42, the only lot of the three that has been developed. ⁵ ¶ 15 Assuming that...