Hi-Country Estates Homeowners Ass'n v. Frank
| Citation | 2023 UT 7 |
| Decision Date | 04 May 2023 |
| Docket Number | 20200689 |
| Parties | Hi-Country Estates Homeowners Association, Phase II, Appellee, v. Robbie Frank, as Trustee of High Canyon Rd 20 Trust, Dated May 27, 2009, and High Canyon Rd 15 Trust, Dated May 27, 2009, Appellant. |
| Court | Supreme Court of Utah |
Heard February 9, 2022
On Direct Appeal Third District Court, Salt Lake County The Honorable Patrick W. Corum No. 129914525
Jeffrey L. Silvestrini, Stephen T. Hester, Bradley M Strassberg, Salt Lake City, for appellee
Troy L. Booher, Beth E. Kennedy, Taylor P. Webb, Salt Lake City Landon A. Allred, South Jordan, Bruce R. Baird, Salt Lake City, for appellant
Due to their retirements, Justice Himonas and Justice Lee did not participate herein; Court of Appeals Judge David N. Mortensen and Court of Appeals Judge Ryan D. Tenney sat.
Justice Hagen became a member of the Court on May 18, 2022, after oral argument in this matter, and accordingly did not participate.
Justice Pohlman became a member of the Court on August 17, 2022, after oral argument in this matter, and accordingly did not participate.
¶1 In this appeal, we must determine whether a homeowners association has the authority to assess property within its boundaries, despite alleged defects in the association's founding documents. The Hi-Country Estates Homeowners Association, Phase II (HOA) brought a lawsuit to collect unpaid assessments against Robbie Frank, the trustee of two trusts that each own a lot within the HOA's boundaries (Lots).[1] The HOA was formed in 1973. And since at least 1979, prior owners of the Lots have paid the HOA's annual assessments. But when Frank purchased the Lots on behalf of the trusts in 2009, he refused to pay the assessments. He argues here that the HOA has no authority to assess the Lots because the person who signed the HOA's founding documents approximately fifty years ago did not actually own most of the property he included within the HOA's boundaries, including the Lots. Frank contends that this renders the founding documents void and the HOA powerless.
¶2 Both the HOA and Frank moved for summary judgment in the district court. And the district court sided with the HOA. Relying in large part on our reasoning in Swan Creek Village Homeowners Ass'n v. Warne, 2006 UT 22, 134 P.3d 1122, the district court concluded that the HOA had authority to assess the Lots, even assuming there were problems with its founding documents, because the members of the HOA had subsequently ratified the HOA's authority over the years. On this basis, the court partially granted the HOA's motion, concluding that the HOA was entitled to collect the past due assessments, but that a bench trial would be necessary to determine the amount owing.
¶3 Frank appeals. He argues that the district court erred because the documents establishing the HOA are void as against public policy, and void documents cannot be ratified. In the alternative, he argues that the court incorrectly determined that ratification had occurred here.
¶4 We affirm the district court. We have concluded in another case involving the same HOA and the same governing documents that the documents are merely voidable, not absolutely void. WDIS, LLC v. Hi-Country Ests. Homeowners Ass'n, Phase II (WDIS II), 2022 UT 33, ¶ 46, 515 P.3d 432. And voidable documents are subject to ratification. That holding applies here. And we conclude that the district court correctly determined that the members of the HOA have collectively ratified the HOA's authority. Therefore, we agree that the HOA has authority to assess the Lots. And we affirm the district court's determination of the amount owing.
BACKGROUND[2]
¶5 In 1973, a man named Charles Lewton signed and recorded protective covenants and a certificate of incorporation for "Hi-Country Estates, Phase II." The documents established the HOA and included within its boundaries approximately 2,000 acres of land near Herriman, Utah. The Lots were included within the boundaries of the HOA at its inception as lots 170-A and 171.
¶6 The 1973 protective covenants stated that the "owners of the herein described property, hereby subject said property to the following covenants, restrictions and conditions." Among other things, the covenants provided that each lot owner would be a member of the HOA and would "pay annually his pro-rata share of the cost to maintain the roads, streets and common areas."
¶7 The HOA's governing documents have been revised and amended over the years. The current governing documents are the Certificate of Incorporation and Addendum to Certificate of Incorporation; the Second Revised Protective Covenants, including subsequent amendments, dated December 10, 1980 (1980 Protective Covenants); and the First Revised-1988 ByLaws, including subsequent amendments (1988 By-Laws) (together, governing documents). All of the original and current governing documents were duly recorded with the Salt Lake County Recorder.
¶8 The 1980 Protective Covenants were signed by the President, Vice President, and Director of the HOA, purportedly "in response to the wishes of the majority of Association Members during the Annual Membership Meeting on July 6, 1980." Like the original protective covenants, the 1980 Protective Covenants stated that a homeowners association would be established, that each lot owner would be a member of the association, and that each lot owner would pay a pro-rata share of the assessments.
¶9 The 1988 By-Laws were enacted at an annual meeting of HOA members. ―The By-Laws, like the Covenants, provide[d] for the obligation of lot owners to pay assessments, [and] the ability of the HOA to collect such assessments
¶10 From at least 1979 to the present, the HOA has held regular meetings and elections, disseminated communications and reports to its members, provided various services for the members, collected yearly assessments from the members, and "otherwise acted as a homeowner association" with respect to the property within its boundaries. No competing association has emerged.
¶11 There are currently hundreds of HOA members. And most members have paid their assessments to the HOA.
¶12 The HOA has assessed the Lots since 1979. And previous owners of the Lots have duly paid these assessments.
¶13 In 2009, two trusts purchased the Lots.[3] Appellant Robbie Frank is the trustee of both trusts. The governing documents had long been of record by the time of this purchase, providing notice that each lot owner within the HOA's boundaries is a member of the HOA and must pay annual assessments. However, from the time the trusts purchased the Lots, Frank has refused to pay the assessments levied by the HOA.
¶14 Yet, Frank has participated and voted in HOA meetings on behalf of the trusts. He has also acknowledged that the property is within the HOA boundaries and that, consequently, the trusts are members of the HOA.
¶15 In 2012, the HOA sued the trusts to obtain the past-due assessments. The HOA's complaint did not progress for reasons that are not clear from the record.
¶16 Meanwhile, in 2015, other lot owners who were involved in separate litigation against the HOA claimed that they had discovered evidence showing that when Charles Lewton established the HOA and signed the governing documents in 1973, he owned less than 1 percent of the property he included in the HOA's boundaries. Frank alleges that the acreage Charles Lewton owned did not include the Lots.[4]
¶17 This information led to a lawsuit in 2016, in which a group of property owners referred to collectively as "WDIS" filed a quiet title action against the HOA. WDIS moved for a declaration that the governing documents signed by Charles Lewton were void ab initio (from the beginning), because it violated public policy for Lewton to encumber property that he did not own. WDIS, LLC v. Hi-Country Ests. Homeowners Ass'n, Phase II (WDIS II), 2022 UT 33, ¶ 9, 515 P.3d 432.
¶18 The same year, the HOA filed a new complaint against Frank on behalf of the trusts. Frank answered the HOA's complaint and included a defense that "[t]he alleged HOA's claims are barred, in whole or in part, because the HOA does not legally exist as alleged in the [WDIS Litigation] and thus has no right to make any assessments and never has."
¶19 The district court consolidated the HOA's 2012 and 2016 complaints against Frank. The following year, the HOA moved for summary judgment, which Frank opposed. The day after briefing closed on the summary judgment motion, Frank moved for leave to amend his answer to the HOA's 2016 complaint. He sought to add counterclaims for quiet title and wrongful lien.
¶20 After hearing both motions, the district court denied the HOA's motion for summary judgment, concluding that the HOA had failed to meet its burden of proof. The district court also denied Frank leave to amend, concluding, among other things, that the motion was untimely.
¶21 Subsequently, the HOA filed a second motion for summary judgment. This motion argued that the district court should determine as a matter of law that Frank owed the HOA unpaid assessments pursuant to the Utah Community Association Act and the HOA's governing documents. It included declarations from the HOA director and manager regarding the amount due.
¶22 Frank filed a competing motion for summary judgment, which challenged the HOA's authority to assess the Lots. Among other things, he...
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