Kenny v. Rich

• Decision Date: 30 May 2008
• Docket Number: No. 20070391-CA.,20070391-CA.
• Citation: 186 P.3d 989,2008 UT App 209
• Parties: James J. KENNY; Patricia D. Kenny; James E.B. Stuart; Eileen A. Stuart; Robert C. Slettom; Faye Slettom; Richard L. Measelle; Chase Peterson; Grethe B. Peterson; and Thaynes Canyon 1 Homeowners Association, an unincorporated association, Plaintiffs and Appellees, v. John L. RICH, Defendant and Appellant.
• Court: Utah Court of Appeals

186 P.3d 989

2008 UT App 209

James J. KENNY; Patricia D. Kenny; James E.B. Stuart; Eileen A. Stuart; Robert C. Slettom; Faye Slettom; Richard L. Measelle; Chase Peterson; Grethe B. Peterson; and Thaynes Canyon 1 Homeowners Association, an unincorporated association, Plaintiffs and Appellees, v. John L. RICH, Defendant and Appellant.

No. 20070391-CA.

Court of Appeals of Utah.

May 30, 2008.

Denver C. Snuffer Jr. and Bret W. Reich, Sandy, for Appellant.

Erik A. Olson and Thomas J. Burns, Salt Lake City, for Appellees.

Before GREENWOOD, P.J., BENCH and ORME, JJ.

OPINION

BENCH, Judge:

¶ 1 Defendant John L. Rich appeals from a preliminary injunction issued against him and an award of attorney fees entered in favor of his homeowners association and the above-named Plaintiffs (collectively, the HOA). Rich challenges the district court's (1) conclusion that he waived his right to arbitrate the dispute, (2) vacation of the arbitration award for lack of an agreement to arbitrate, (3) assertion of jurisdiction over him in light of problems with the HOA's service of process, (4) decision to proceed with a bench trial rather than a jury trial, (5) failure to require the HOA to post a bond at the time a temporary restraining order was issued against him, (6) conclusion that the HOA was entitled to attorney fees, and (7) calculation of the HOA's reasonable attorney fees. We affirm and remand for an award to the HOA of attorney fees it has reasonably incurred on appeal.

BACKGROUND

¶ 2 Rich owns property that is part of the Thaynes Canyon Subdivision (the Subdivision) in Park City, Utah. Property in the Subdivision is subject to the conditions, covenants, and restrictions outlined in the Subdivision's Declaration of Protective Covenants (the Declaration). The Declaration contains a provision that requires a ten-foot setback from side and rear lot lines for any buildings and structures.

¶ 3 On July 19, 2005, Michael DeCarlo, Rich's architect and son-in-law, brought plans for an addition to Rich's home to James Stuart, a trustee of the HOA. These plans indicated that the addition to Rich's home would be 6.8 feet from Stuart's property line. Stuart objected to the plans on the basis that they violated the Declaration's provision that required all buildings to be set back ten feet from the lot line. The next day, Stuart gave DeCarlo a copy of the Declaration, and DeCarlo stated that he would not comply with the setback requirements contained therein.

¶ 4 Two days later, on July 21, 2005, the trustees of the HOA (the Trustees) held a meeting in which Stuart reported DeCarlo's intent to proceed with construction on Rich's home despite the apparent violation of the Declaration's setback provision. At the meeting, the Trustees determined that Rich's plans would violate the Declaration's setback provision and that a variance to or waiver of those requirements would not be granted. That same day, James Kenny, the president of the HOA, called Rich and left a voice message informing him of this determination and indicating that legal action would be taken if Rich did not halt the contemplated construction. Also that same day, Kenny called DeCarlo and informed him of the Trustees' determination regarding the setback. DeCarlo responded that he and Rich would not comply with the Declaration's ten-foot setback requirement because Park City required only a five-foot setback.

¶ 5 Subsequently, excavation began for the addition to Rich's home. Kenny again called Rich and advised him to cease construction because of the setback violations. Rich responded that he intended to proceed with construction.

¶ 6 On August 29, 2005, Kenny received a letter from DeCarlo requesting that the HOA undergo arbitration to resolve its dispute with Rich regarding the setback requirements. The next day, the HOA sent a letter to DeCarlo advising him that arbitration had been waived due to the untimely demand.¹ The HOA filed a complaint in district court, bringing claims for injunctive relief, declaratory relief, and breach of contract. The HOA also requested a temporary restraining order (the TRO).

¶ 7 On the day of the TRO hearing, Rich filed a motion to quash the summons and a motion to dismiss. In his motion to quash, Rich argued that service of process had been improper. In his motion to dismiss, Rich argued that the Declaration required that all disputes between the HOA and its members be resolved through arbitration. At the hearing, the HOA responded that Rich had waived his right to arbitration. To allow time for the HOA to file a written response, the court reserved ruling on Rich's motions. The court nonetheless granted the requested TRO and ordered the parties to submit to arbitration. The court noted the arguments about Rich's waiver of the right to arbitration but decided that arbitration would be a practical and efficacious means to resolve the dispute. The TRO ordered Rich and his agents to refrain from construction in any manner that impinged on the ten-foot setback provision of the Declaration. The court did not require the HOA to post a bond in connection with the TRO.

¶ 8 While the parties prepared for arbitration, Rich proceeded with construction on the addition to his home. Rich's attorney signed the acknowledgment and confirmation provision at the end of the arbitrator's engagement letter (the Acknowledgment) but only "upon condition that this does not waive any right of [his] client; who objects to jurisdiction and sufficiency of service of process." Rich's counsel explained his conditions by writing, "There are pending motions to dismiss before the [c]ourt which are under advisement. My appearance does not subject my client to the [c]ourt's jurisdiction."

¶ 9 In response to Rich's actions following entry of the TRO, the HOA requested an order to show cause and moved that the scheduled arbitration be canceled until Rich removed the condition imposed by his attorney and his objections to jurisdiction. The district court signed the order to show cause and ordered the arbitration canceled "until further notice." Notwithstanding the district court's order canceling the arbitration, Rich and the arbitration panel proceeded with the arbitration hearing without the HOA's attendance or participation. The arbitration panel determined that it had jurisdiction to consider the claims arising under the case pending in the district court because Rich had not objected to the jurisdiction of the arbitration panel—just that of the court— and because the HOA and Rich had signed the Acknowledgment at the end of the engagement letter sent by the arbitrators.² The arbitration panel reasoned that "although the arbitration was initially ordered by the [c]ourt, it ceased to be [c]ourt-ordered when the parties executed the [Acknowledgment]." Following the arbitration hearing, the arbitration panel ruled that Rich was entitled to a variance of the setback provision in the Declaration and issued an "Interim Award" in his favor. Rich filed in the district court a renewed motion to dismiss, citing the arbitration panel's resolution of the underlying dispute regarding the setback violations.

¶ 10 Subsequently, the district court denied Rich's motion to dismiss and vacated the arbitration award. The district court first noted that section 8.3 of the Declaration "clearly states ... that any party ... desiring to arbitrate any controversy shall file written notice of that desire with the [HOA] ... within 30 days of when he discovers or learns or has notice of such determination or action or decision of [the HOA]." The district court found that Rich "knew of the decision of the [HOA] Trustees [on] July 21, 2005," but his demand for arbitration—in the form of a letter from his architect, DeCarlo—was made "at the earliest [on] August 26, but probably [on] August 29, 2005."³ The court determined that Rich "clearly knew more than 30 days before August 29, or August 26, 2005, that the [HOA] would not grant a variance or a waiver" with respect to his violation of the Declaration's setback provision. Thus, the district court held that "[Rich's] demand [for arbitration] was not timely and arbitration was waived under the Declaration."

¶ 11 In connection with its ruling on the motion to dismiss, the district court also concluded that the Acknowledgment signed by both the HOA and Rich did not constitute a separate agreement to arbitrate their dispute. The district court found that "arbitration was done because the court ordered it even though it is now clear it had been waived and was not properly demanded." Further, the court determined that "the `agreement' to arbitrate [wa]s void because it [wa]s ambiguous and d[id] not amount to a meeting of the minds" in light of Rich's insertion of additional conditions. The court specifically found that the HOA had "signed the agreement ONLY BECAUSE the court ordered them to as part of the TRO process." The district court then vacated the arbitration panel's interim award because "the arbitration was not based on a valid agreement to arbitrate because that desire for arbitration had been waived by the untimely request for such arbitration."

¶ 12 After a subsequent evidentiary hearing, the district court considered Rich's motion to quash the summons, in which Rich asserted that despite the private process server's affidavit to the contrary, Rich had never been personally served and that the summons improperly stated that Rich must respond in twenty days, rather than thirty days. Here, the private process server filed the return of service and a subsequent affidavit certifying that he personally served a summons and complaint at Rich's residence in California on a woman who answered the door and appeared to be a resident. Rich presented evidence—affidavits from himself, his son, and his daughter—in an attempt to rebut the process server's proof of service and affidavit. In reviewing this evidence, the district court found ...