Friends of Tuhaye, LLC v. Tuhaye Homeowners Association, 060619 FED10, 18-4065

Docket Nº:18-4065
Opinion Judge:Gregory A. Phillips Circuit Judge
Party Name:FRIENDS OF TUHAYE, LLC, a Delaware limited liability company, Plaintiff Counter Defendant Intervenor Defendant-Appellant, v. TUHAYE HOMEOWNERS ASSOCIATION, a Utah non-profit organization, Defendant Counterclaim Plaintiff Cross-Claimant - Appellee, v. JRAT INVESTMENTS, LLC, a Delaware limited liability company, Intervenor Plaintiff Third-Party ...
Judge Panel:Before PHILLIPS, KELLY, and CARSON, Circuit Judges.
Case Date:June 06, 2019
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

FRIENDS OF TUHAYE, LLC, a Delaware limited liability company, Plaintiff Counter Defendant Intervenor Defendant-Appellant,


TUHAYE HOMEOWNERS ASSOCIATION, a Utah non-profit organization, Defendant Counterclaim Plaintiff Cross-Claimant - Appellee,


JRAT INVESTMENTS, LLC, a Delaware limited liability company, Intervenor Plaintiff Third-Party Plaintiff Cross-Claim Defendant,


CHRISTOPHER STUHMER, an individual, Third-Party Defendant.

No. 18-4065

United States Court of Appeals, Tenth Circuit

June 6, 2019

(D.C. No. 2:14-CV-00901-DN) (D. Utah)

Before PHILLIPS, KELLY, and CARSON, Circuit Judges.


Gregory A. Phillips Circuit Judge

This case concerns the interpretation and enforcement of covenants governing a luxury residential community. A developer, which owned eight lots within the community, claims that the covenants apply only after homes have been built and sold. The community's homeowners association and the district court say otherwise. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.


Friends of Tuhaye (FOT) is a real-estate developer that purchased several lots in the Tuhaye Subdivision, intending to build and sell homes. FOT organized these lots into a sub-community called Christopher Homes at Tuhaye (Christopher Homes). Starting in 2007, FOT poured eight concrete foundations within Christopher Homes. Misfortune fell when the bank financing the project failed. The FDIC froze the bank's assets, including FOT's partially developed lots. As a result, FOT halted construction. For the next several years, the foundations sat dormant and exposed.

The Tuhaye Homeowners Association (the HOA) oversees the Tuhaye Subdivision and, by extension, Christopher Homes. In 2009, the HOA began discussing the "nuisance, eyesore, and safety hazard" created by the unfinished foundations. Appellant's App. at 626. Meeting minutes from 2009 reflect the HOA's growing concern with the foundations as well as FOT's professed intent to bring in topsoil and fill in the foundations. FOT never followed through with this plan.

In 2012, several Tuhaye residents complained to the HOA and local officials about the foundations. One resident "complained of the attractive nuisance that the exposed foundations posed to his young sons." Id. at 625. Another resident "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." Id. She also sent a copy of the letter to FOT. And a third resident complained to the HOA about the communal "safety hazard caused by the exposed foundations" and protruding rebar reinforcements. Id.

In response, the HOA informed FOT that the exposed foundations violated the covenants' prohibition against nuisances. FOT responded by offering to build a fence around the foundations. The HOA declined the offer, insisting that a fence was not a suitable long-term solution. FOT remained adamant that a fence was an appropriate solution and sent a crew to the subdivision with instructions to install a chain-link fence around the foundations. A security guard turned the crew away.

On September 10, 2012, the HOA sent a letter to FOT advising that the Architectural Review Committee (the ARC) had deemed the foundations a nuisance. In the letter, the HOA reiterated that "the most reasonable way to abate the nuisance was to cover the exposed foundations with quality top soil." Id. at 255. The letter gave FOT 14 days to abate the nuisance before the HOA would take corrective action.

During an October 2012 HOA meeting, the topic of the exposed foundations again arose. And, once again, the ARC stated that "a fence [would] not mitigate the nuisance and [would] actually present[] a greater nuisance or liability risk." Id. at 265. A few weeks later, the HOA filled in the exposed foundations and billed FOT for the cost of the work. FOT refused to pay, so the HOA placed an assessment lien on each of the lots.

In 2014, FOT agreed to sell six of its lots to JRAT Investments. As part of the sale, FOT funded an escrow account as security against the HOA liens on the lots. FOT then sued the HOA for trespass, slander of title, and injunctive relief. FOT also alleged that the HOA had acted in bad faith by refusing FOT's offer to erect a protective fence. The HOA counter-claimed for breach of contract and moved for summary judgment. Soon after, JRAT intervened in the suit and asserted a claim to the escrow funds. In turn, the HOA cross-claimed against JRAT seeking foreclosure on the liens.

The district court granted the HOA's motion for summary judgment. Later, the court approved a stipulated order between JRAT and the HOA. The parties stipulated that judgment be entered against JRAT in favor of the HOA. They also stipulated that JRAT would not hinder the HOA's attempts to execute on the escrow funds. After additional briefing, the court entered a separate order awarding damages and attorney's fees to the HOA. FOT now appeals.


FOT appeals the district court's summary-judgment order as well as the order awarding damages and attorney's fees. FOT also attacks the stipulations between JRAT and the HOA. We address each of FOT's arguments in full.

First, we consider whether the covenants apply to FOT's eight partially developed lots. The answer to this inquiry dictates whether the district court correctly dismissed FOT's trespass and slander-of-title claims and properly denied FOT's request for injunctive relief. Second, we consider whether, as a matter of law, the HOA breached the implied covenant of good faith and fair dealing. Next, we analyze the stipulated order between the HOA and JRAT, and finally, we turn our attention to the damage award and the grant of attorney's fees. Finding no error in any of these issues, we affirm.

I. The Summary-Judgment Order

FOT first attacks the district court's order granting summary judgment in the HOA's favor. We review de novo a grant of summary judgment. Gross v. Burggraf Constr. Co., 53 F.3d 1531, 1536 (10th Cir. 1995). "Summary judgment is appropriate when, viewing the record in the light most favorable to the nonmoving party, there is no genuine dispute over a material fact and the moving party is entitled to judgment as a matter of law." TPLC, Inc. v. United Nat'l Ins. Co., 44 F.3d 1484, 1489 (10th Cir. 1995) (internal quotation marks omitted).1

A. FOT's Claims for Trespass, Slander of Title, and Injunctive Relief

We first consider whether the district court erred when it denied FOT's request for injunctive relief and dismissed FOT's claims for trespass and slander of title. To resolve these issues, we must determine whether the covenants apply to FOT's lots. The answer will dictate the propriety of the district court's summary-judgment ruling.

The Tuhaye Subdivision was under the control of a master declaration-titled Declaration of Covenants, Conditions, and Restrictions for Tuhaye, A Planned Community (the Covenants)-which contained an extensive set of regulations. A master declaration like the one at issue here is a contract between a homeowners association and the property owners. Swan Creek Vill. Homeowners Ass'n v. Warne, 2006 UT 22, ¶ 44, 134 P.3d 1122, 1131. When interpreting such contracts, we look to the plain language contained "within the four corners of the contract." Café Rio, Inc. v. Larkin-Gifford-Overton, LLC, 2009 UT 27, ¶ 25, 207 P.3d 1235, 1240 (quoting Green River Canal Co. v. Thayn, 2003 UT 50, ¶ 17, 84 P.3d 1134, 1141). If the language is clear, our analysis ends, and we enforce the plain terms. Id. If the language is ambiguous, we will consider extrinsic evidence to determine the parties' intent. Id.

Here, we see no ambiguity in the Covenants and, accordingly, we interpret the document according to its plain terms. The Covenants state that by accepting a deed to property within the Tuhaye Community, a "Person . . . evidences his, her, or its intent that all the restrictions, conditions, covenants, rules and regulations contained in this Declaration shall run with the land and be binding on all subsequent and future Owners." Appellant's App. at 133. The Covenants define "Person" as "a natural person, corporation, business trust, estate, trust, partnership, association, limited liability company, limited liability partnership, joint venture, government, governmental subdivision or agency, or other legal or commercial entity." Id. at 132. We fail to see how these terms would not include FOT. It is, after all, a limited-liability company that accepted deed to the lots within the Tuhaye Community. Accordingly, we conclude that the Covenants apply to FOT.

Alternatively, FOT argues that even if the Covenants apply generally to its lots, the...

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