Lewis & Clark Cnty. v. Wirth

• Decision Date: 31 May 2022
• Docket Number: DA 21-0237
• Parties: LEWIS AND CLARK COUNTY, a political subdivision of the State of Montana, Petitioner and Appellee, v. Philip R. WIRTH, et al., Respondent and Appellant. Bridge Creek Estates Homeowners Association, Cross-Claimant and Appellee, v. Philip R. Wirth, Cross-Defendant and Appellant.
• Court: Montana Supreme Court

510 P.3d 1206

LEWIS AND CLARK COUNTY, a political subdivision of the State of Montana, Petitioner and Appellee,
v.
Philip R. WIRTH, et al., Respondent and Appellant.

Bridge Creek Estates Homeowners Association, Cross-Claimant and Appellee,
v.
Philip R. Wirth, Cross-Defendant and Appellant.

DA 21-0237

Supreme Court of Montana.

Submitted on Briefs: December 8, 2021
Decided: May 31, 2022

For Appellant: Joseph P. Cosgrove, Hoyt & Blewett PLLC, Great Falls, Montana

For Appellee Bridge Creek Estates Homeowners Association: Cherche Prezeau, Colin Phelps, J. Stuart Segrest, Christensen & Prezeau, PLLP, Helena, Montana

For Lewis and Clark County: Alan F. McCormick, Garlington, Lohn & Robinson, PLLP, Missoula, Montana, Leo J. Gallagher, Lewis and Clark County Attorney, C. Nicholas Hash, Deputy County Attorney, Helena, Montana

Justice James Jeremiah Shea delivered the Opinion of the Court.

¶1 Respondent and Cross-Defendant Philip R. Wirth appeals the November 16, 2018 order granting summary judgment in favor of Lewis and Clark County ("the County") and Bridge Creek Estates Homeowners Association ("the HOA") on the County's claim for declaratory judgment and on Wirth's counterclaim against the County, and the May 27, 2020 order granting summary judgment and attorney fees to the HOA. We address:

1. Whether the District Court erred in its interpretation of § 2.2 of the Covenants by concluding Wirth is unambiguously prevented from further subdividing the lots retained by him within the Bridge Creek Estates Major Subdivision.

2. Whether the District Court erred by granting summary judgment to the County and dismissing Wirth's counterclaim for statutory damages under § 76-3-625(1), MCA.

510 P.3d 1210

3. Whether the District Court erred in its interpretation of § 7 of the Covenants as obligating Wirth to serve each lot within the Bridge Creek Estates Major Subdivision with dual water lines.

4. Whether the District Court prematurely granted attorney fees to the HOA.

¶2 We reverse in part and affirm in part and remand for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

¶3 In February 2006, Wirth obtained approval to develop the Bridge Creek Estates Major Subdivision ("the Subdivision"). On February 23, 2006, Wirth recorded the original plat with the County that contained 100 residential lots and one large remainder lot retained by Wirth.¹ At this time, Wirth recorded the Declaration of Covenants, Conditions and Restrictions of Bridge Creek Estates ("the Covenants").

¶4 In 2007, Wirth submitted a proposal to the County to further subdivide Lot 23, one of the 100 residential lots in the Subdivision. As part of its review process, the County reviewed the Covenants. The County's associate planner generated a staff report indicating the proposed subdivision of Lot 23 would not violate any of the Covenants. Wirth did not move forward with the 2007 proposal to subdivide Lot 23.

¶5 In 2011, Wirth submitted a new proposal, seeking to subdivide and readjust the boundaries of eight unsold lots into eleven smaller lots, and to consolidate multiple unsold lots and the large remainder lot retained by Wirth into three larger lots: Lot 9A, Lot 11A, and Lot 101A. After holding a public meeting, and after considering "all testimony from the public, the preliminary plat application and supplements, [and] the staff report,"² the County conditionally approved the plat. The County did not indicate that the proposal would violate any of the Covenants. The County concluded that upon Wirth completing "recommended conditions of approval," the proposal would comply with "subdivision regulations."³ The County granted final approval to the amended plat in 2013. Wirth recorded the amended plat in 2013, designating Lot 11A and Lot 101A "FOR FUTURE DEVELOPMENT."

Further Subdivision of Lots

¶6 In 2014, Wirth submitted a proposal for a second amended plat, seeking to subdivide the three large lots into fifty smaller lots. In its review of this proposal, the County interpreted the second sentence of § 2.2 of the Covenants as prohibiting further subdivision of any lot in the Subdivision, including Wirth's three large undeveloped lots. A new staff report noted "[d]uring review of the [2013] Amended Plat of Bridge Creek Estates Major Subdivision, Planning staff did not review the covenants and thus was not aware of the prohibition of further subdivision." In September 2015, the County conditionally approved Wirth's proposal but required him to amend § 2.2 of the Covenants by removing the prohibition on further subdivision of "any Lot." To amend the Covenants, Wirth needed to obtain an agreement of all owners of lots in the Subdivision. Wirth was unable to secure an agreement from all owners. Wirth requested the County remove this condition.

¶7 The County filed a petition for declaratory judgment that § 2.2 prohibits further

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subdivision of all lots, including those retained by Wirth, within the Subdivision. The HOA joined the lawsuit, also objecting to the further subdivision of Wirth's three large lots. Wirth responded seeking a declaratory judgment that § 2.2 did not apply to the lots he retained and filed counterclaims for negligent misrepresentation and statutory damages against the County under § 76-3-625, MCA.

¶8 The recorded Covenants contain the following relevant sections:

WHEREAS, the Declarant wishes to place restrictions, covenants and conditions upon the Property for the use and benefit of himself as present Owner, and for the future Owners thereof, ensure the use of the Property for attractive residential purposes only ... with no greater restriction upon its free and undisturbed use than is necessary to ensure the same advantages to all property Owners.

NOW, THEREFORE, the Declarant hereby declares that all real property described herein shall be held, sold, and conveyed subject to the following covenants, conditions and restrictions, all of which are for the purpose of enhancing and protecting the value, desirability, and attractiveness of the Property by providing a reasonably uniform plan for development of the same as desirable residential property.

...

All provisions of this Declaration and any rules shall apply to all Owners , occupants, tenants, guests and invitees or anyone who may hereafter acquire any interest in any Lot ....

...

1. DEFINITIONS

...

1.2 "Property" means the real property herein described in the Bridge Creek Estates Master Plan.⁴

1.3 "Lot" means any Lot of land shown in the Bridge Creek Estates Master Plan.

...

2. LAND USE

2.1 The Property, and each and every Lot thereof, shall be used for single family residential purposes only. There shall be no more than one single family dwelling constructed or located on each Lot.

2.2 Any Lot purchased from Declarant can be resold without restriction. No further subdivision of any Lot is permitted. Minor boundary adjustments which do not significantly change Lot size and to which adjacent Owners agree, is permitted.

(Emphasis added.)

¶9 The District Court granted summary judgment to the County and the HOA regarding the interpretation of § 2.2 of the Covenants. The court held that the second sentence of § 2.2 prohibiting "further subdivision of any Lot" was unambiguous and applied to all lots, including those retained by Wirth. The court also granted summary judgment to the County on Wirth's statutory damages claim, finding that the County's interpretation of § 2.2 results in an unsupported claim for damages, and that the County's actions were not arbitrary, capricious, or unlawful. The court noted that the 2015 contingent approval was not a final agency decision.

Dual Water Lines

¶10 After Wirth recorded the Covenants in 2006, he began developing the Subdivision. Wirth installed dual water lines to all lots in the Subdivision except eleven lots known collectively as Powder River Court.⁵ When Wirth recorded the original plat, the plat noted that Lots 1-23, which include the lots in Powder River Court, would only be supplied with well water. When the lots were

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reconfigured with the 2013 amended plat, Wirth implemented a new water system design, approved by the Montana Department of Environmental Quality and the County Planning Board, that would supply water to Powder River Court...