Eagle Ridge Estates Homeowners Ass'n, Inc. v. Anderson

Citation827 N.W.2d 859,2013 S.D. 21
Decision Date27 February 2013
Docket NumberNos. 26363,26377.,s. 26363
PartiesEAGLE RIDGE ESTATES HOMEOWNERS ASSOCIATION, INC., Plaintiff and Appellee, v. Terry Mitchell ANDERSON a/k/a Terry M. Anderson; Ann Carol Anderson a/k/a Ann C. Anderson; and Trust of Terry Mitchell Anderson and Ann Carol Anderson Dated April, 8, 2005, Defendants and Appellants.
CourtSupreme Court of South Dakota

OPINION TEXT STARTS HERE

Thomas E. Brady of Brady & Pluimer, PC, Spearfish, South Dakota, Attorneys for plaintiff and appellee.

Eric J. Pickar, Joseph M. Dylla of Bangs, McCullen, Butler, Foye & Simmons, LLP, Rapid City, South Dakota, Attorneys for defendants and appellants.

WILBUR, Justice.

[¶ 1.] This is the second appeal to this Court concerning the amount Terry and Ann Anderson (Andersons) owe Eagle Ridge Estates Homeowners Association, Inc. (Homeowners Association) for general road assessments pursuant to an easement agreement.

FACTS AND PROCEDURAL BACKGROUND

[¶ 2.] Homeowners Association and Andersons have been involved in protracted litigation regarding assessments on Andersons' three lots in a subdivision (Eagle Crest) adjacent to the Eagle Ridge Estates subdivision. Eagle Ridge Estates Homeowners Ass'n, Inc. v. Anderson ( Eagle Ridge I ), 2010 S.D. 1, ¶ 2, 777 N.W.2d 369, 371. Andersons' predecessor in title obtained a private access easement from the prior owners of Eagle Ridge Estates subdivision. Id. This “private access easement[,] operat[ing] as a covenant running with the land and [binding] and inur[ing] to the benefit of ‘successors in title [,] allows Andersons to have access to their property in Eagle Crest by way of roads running through Eagle Ridge. Id. In exchange, the grantee of the easement “agreed to pay an annual general road assessment for each lot.” Id.

[¶ 3.] Homeowners Association brought suit against Andersons for their failure to pay general assessments for the 2005, 2006, and 2007 assessment years. Id. ¶ 3. Andersons argued that Homeowners Association “only ha[d] authority to assess ‘general road assessments' against them under the easement agreement, [and] not ‘general assessments[,] which were outside of the contractual obligations. Id. The trial court granted summary judgment in favor of Homeowners Association and entered a judgment allowing Homeowners Association to foreclose on Andersons' lots. Id. Andersons appealed arguing that “genuine issues of material fact exist[ed] as to the amount ... owe[d] for general road assessments.” Id. The trial court awarded Homeowners Association $4,200 in attorney fees from its requested $8,628.69.

[¶ 4.] This Court interpreted “the plain meaning of the easement term ‘general road assessments' to be “limited to expenses associated with roads.” Id. ¶ 8. Additionally, we determined that there existed “a question of material fact [as to] whether the assessment that Homeowners Association imposed upon Andersons only include[d] assessments for roads.” Id. ¶ 9. This Court noted that Homeowners Association's “own evidence indicate[d] it used general assessments to pay for items other than roads, such as liability insurance and miscellaneous expenses, including postage and photocopies.” Id. Thus, we reversed and remanded the trial court's grant of summary judgment in favor of Homeowners Association. Id. ¶ 10. Additionally, we reversed the trial court's award of attorney fees ($4,200) and did not address Homeowners Association's notice of review regarding attorney fees ($8,628.69) incurred for work performed. Id. ¶ 10 n. 2.

[¶ 5.] On remand, the trial court held a trial and determined whether the expenditures made by Homeowners Association were associated with roads. Homeowners Association presented testimony of Clint Meyer, a former president and board member of Homeowners Association. Meyer testified that Homeowners Association had only two functions: roads in the subdivision and architectural reviews of building plans proposed by lot owners. He indicated that Homeowners Association had never incurred any expenses as a result of the architectural reviews. Further, he testified that Homeowners Association did not make any expenditures that were not related to the roads in the subdivision. Meyer then examined all of the expenses in Homeowners Association's financial documents and explained to the court how all were related to or associated with the subdivision roads.

[¶ 6.] In response, Andersons presented the expert testimony of Jennifer Konvalin, a certified public accountant. Following a review of Homeowners Association's financial documents, Konvalin used the Internal Revenue Service (IRS) rules and regulations to categorize Homeowners Association's expenses as general expenses, general road expenses, or capital expenses. Based on her interpretation of the IRS rules and regulations, Konvalin included as general road expenses any expenditures that were “directly related” to maintenance or repair of roads within the subdivision. By contrast, Konvalin did not include general expenses in her calculation of general road assessments because she determined that those expenses were not for the purpose of maintaining the roads. Konvalin also concluded that Homeowners Association's capital expenses were required to be excluded from the general road assessment based on her belief that capital expenditures should be treated differently than general road expenses.

[¶ 7.] Based on this approach, Konvalin determined that expenses for liability insurance, gutters for the mailboxes, food and drinks for meetings, office supplies and postage were general expenses not a part of the general road assessment. Conversely, Konvalin determined that gravel, snow removal, and drainage pipe expenses were expenses that are a part of the general road assessment. Additionally, Konvalin concluded that Homeowners Association's installation of guardrails was a capital expense.

[¶ 8.] Konvalin also devised an alternative method of calculating the general road assessments. In doing so, she calculated the general road assessments owed based upon the number of miles of Homeowners Association's roads each property owner utilized in order to get to his or her property in each development.

[¶ 9.] After trial, the court found that Konvalin's expert testimony was not “relevant or helpful.” The court also determined that “all expenditures made by [Homeowners Association] during the years 2002 through 2011 were related to roads or associated with roads.” Homeowners Association was therefore entitled both to payment from Andersons for the full amount of the assessments against each of their lots plus interest and to foreclose on the liens on all of Andersons' lots. A judgment was entered against Andersons for $8,011.64 plus interest. The trial court reserved the issue of attorney fees for a later proceeding.

[¶ 10.] Subsequently, Homeowners Association moved for an award of attorney fees requesting $51,892.06, the amount representing all of the work completed before and after the appeal in Eagle Ridge I. The trial court ultimately awarded Homeowners Association $43,263.37 in attorney fees. This amount reflected the amount of legal work completed following the appeal in Eagle Ridge I.

[¶ 11.] Andersons appeal the following issues:

1. Whether the trial court erred by finding the testimony from Andersons' expert witness was not relevant or helpful.

2. Whether the trial court erred by finding that all expenditures made by Homeowners Association during the years 2002 through 2011 were related to or associated with roads.

3. Whether the trial court erred by awarding Homeowners Association's attorney fees.

By notice of review, Homeowners Association seeks review of the trial court's $43,263.37 attorney fee award claiming instead that it was entitled to its requested fee of $51,892.06. Homeowners Association also filed motions for appellate attorney fees pursuant to SDCL 15–26A–87.3 and for delay damages pursuant to SDCL 15–30–6(5).

STANDARD OF REVIEW

[¶ 12.] This Court reviews evidentiary rulings ‘under an abuse of discretion standard.’ Meadowland Apartments v. Schumacher, 2012 S.D. 30, ¶ 24, 813 N.W.2d 618, 624 (quoting State v. Ralios, 2010 S.D. 43, ¶ 38, 783 N.W.2d 647, 658). ‘An abuse of discretion refers to a discretion exercised to an end or purpose not justified by, and clearly against reason and evidence.’ Id. Factual findings are examined under the clearly erroneous standard. SDCL 15–6–52(a). “A finding is ‘clearly erroneous' when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 542, 92 L.Ed. 746 (1948). See, e.g., Mathis Implement Co. v. Heath, 2003 S.D. 72, ¶ 9, 665 N.W.2d 90, 92. [T]he credibility of the witnesses, the import to be accorded their testimony, and the weight of the evidence must be determined by the trial court, and we give due regard to the trial court's opportunity to observe the witnesses and examine the evidence.’ Hubbard v. City of Pierre, 2010 S.D. 55, ¶ 26, 784 N.W.2d 499, 511 (quoting Baun v. Estate of Kramlich, 2003 S.D. 89, ¶ 21, 667 N.W.2d 672, 677).

[¶ 13.] In addition, conclusions of law are reviewed de novo. Estate of Henderson v. Estate of Henderson, 2012 S.D. 80, ¶ 9, 823 N.W.2d 363, 366. Lastly, a trial court's award of attorney fees is reviewed under an abuse of discretion standard. Johnson v. Miller, 2012 S.D. 61, ¶ 7, 818 N.W.2d 804, 806.

ANALYSIS AND DECISION

[¶ 14.] 1. Whether the trial court erred by finding the testimony from Andersons' expert witness was not relevant or helpful.

[¶ 15.] Andersons argue that Konvalin's testimony was both relevant and helpful in distinguishing between expenses that can be categorized as general assessments or as general road assessments, the latter being Andersons' obligation. ‘Relevant evidence’ means evidence...

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