McAdams v. Foxcliff Estates Cmty. Ass'n, Inc.

• Decision Date: 26 January 2018
• Docket Number: Court of Appeals Case No. 55A04–1707–PL–1707
• Citation: 92 N.E.3d 1144
• Parties: Robert A. MCADAMS, Quinn Whitney and Vonda Whitney, Appellants–Plaintiffs, v. FOXCLIFF ESTATES COMMUNITY ASSOCIATION, INC., Appellee–Defendant Foxcliff Estates Community Association, Inc., Third–Party Plaintiff, v. Paul Harnishveger, Mary Harnishveger and Chad Gregory, Third–Party Defendants.
• Court: Indiana Appellate Court

92 N.E.3d 1144

Robert A. MCADAMS, Quinn Whitney and Vonda Whitney, Appellants–Plaintiffs,

v.FOXCLIFF ESTATES COMMUNITY ASSOCIATION, INC., Appellee–Defendant

Foxcliff Estates Community Association, Inc., Third–Party Plaintiff,

v.Paul Harnishveger, Mary Harnishveger and Chad Gregory, Third–Party Defendants.

Court of Appeals Case No. 55A04–1707–PL–1707

Court of Appeals of Indiana.

Filed January 26, 2018

Attorneys for Appellants : Edward R. Hannon, Graham T. Youngs, Steuerwald, Hannon & Witham, LLP, Danville, Indiana

Attorneys for Appellee : Thomas R. Schultz, Justin C. Kuhn, Schultz & Pogue, LLP, Indianapolis, Indiana

Crone, Judge.

Case Summary

[1] Robert A. McAdams, Quinn Whitney, and Vonda Whitney ("the Owners") appeal the trial court's entry of summary judgment in favor of their subdivision's homeowners association, Foxcliff Estates Community Association, Inc. ("the HOA"). The Owners sued the HOA for damages based on the HOA's failure to properly repair and maintain certain drainage ditches in the subdivision as allegedly required by the neighborhood covenants and restrictions. The HOA subsequently moved for summary judgment arguing that the Owners' claim for damages is precluded by an exculpatory clause in the subdivision's covenants and restrictions, and the trial court granted the motion. The sole restated issue for our review is whether the exculpatory clause is unenforceable as a matter of law. Because the Owners have not met their burden to establish that the clause is unenforceable, we affirm summary judgment in favor of the HOA.

Facts and Procedural History

[2] The HOA is a not-for-profit corporation located in Morgan County and was formed for the "primary purposes to own, construct, manage, maintain, preserve, repair, and reconstruct the Common Area" of Foxcliff Estates Subdivision ("Foxcliff Estates"). Appellants' App. Vol. 4 at 35. The Amended Articles of Incorporation and Amended Declarations of Covenants and Restrictions ("the Covenants and Restrictions") for Foxcliff Estates provide the following definitions of "Common Area":

"Common Area" means those areas of land (1) shown on any recorded subdivision plat, (2) described in any recorded instrument or (3) conveyed to or acquired by the [HOA], together with all improvements thereto, which are intended to be devoted to the common use and enjoyment of all the Members, and any utility service lines or facilities not maintained by a public utility company or governmental agency which are located on, over, or below or cross through more than one (1) Parcel.

Id. at 140.

"Common Area" means those areas of land and lakes (1) shown on any recorded subdivision plat, (2) described in any recorded instrument, or (3) conveyed to or acquired by the [HOA], together with all improvements thereto, which are intended to be devoted or dedicated to the common use and enjoyment of all the members; and any drainage facilities which are located on, over, across or through one of more parcels. (i.e. pool, roads, tennis courts, boat launches, dams, other common areas and facilities).

Id. at 36.

[3] Regarding the obligations of the HOA, the Covenants and Restrictions provide that the HOA

shall be responsible for the exclusive management and control of the common areas and all improvements thereon (including furnishings and equipment related thereto), and shall keep the same in good, clean, attractive and sanitary condition, order and repair. However, it shall not be the obligation of [the HOA] to maintain and keep free of leaves, sticks, limbs and other debris in the area along the lakeshore and in the water in the immediate vicinity of privately owned lots.

Id. at 44. The Common Areas include but are not limited to the cemetery, dams, lakes, the Manor House, recreation facilities (the park, pool, tennis courts, and associated surroundings), roads, and signs. Id. at 46–47. As for drainage, the Covenants and Restrictions provide that

[a] lot owner may not use artificial channels or means to divert water from the member's lot to another lot. Each lot owner is responsible to use said property so as to not cause damage to other lots. Appropriate and adequate swales shall be created between adjoining lots that permit proper water drainage.

Id. at 53.¹

[4] Finally, under the title "Enforcement," the Covenants and Restrictions provide,

The [HOA] and any owner shall have the right to enforce, by a proceeding in law or in equity, all restrictions, conditions, covenants, reservations, guidelines, including but not limited to rules or decisions of the Building Control Committee, and any charges or liens now or hereafter imposed by the provisions of this Amended Declaration and of Supplementary Declarations, but the [HOA] shall not be liable in damages of any kind to any person for failure either to abide by, enforce or carry out any of the Restrictions . No delay or failure by any person to enforce any of these Restrictions or to invoke any available remedy with respect to a violation or violations thereof, shall under any circumstances be deemed or held to be a waiver by that person of the right to do so thereafter, or an estoppel of that person to enact any right available to him upon the occurrence, reoccurrence or continuation of any violation or violations of the Restrictions.

Id. at 56–57 (emphasis added).

[5] One of the Owners, McAdams, is the fee title owner of the property known as 4311 North Somerset Drive in Foxcliff Estates. The other Owners, the Whitneys, are the fee title owners of the property known as 4331 North Somerset Drive in Foxcliff Estates. In 2013, Quinn Whitney, and in late 2014, McAdams, complained to the HOA about drainage problems on their respective properties, specifically that water from the higher elevations of land on the west side of Somerset Drive "was not being properly collected in a drainage ditch or culvert and instead was passing across the roadway surface flowing onto their property, saturating it, eroding it and causing serious and unrepairable damage to their homes constructed thereon." Appellants' App. Vol. 2 at 15. In response to complaints by Quinn Whitney, the HOA's Building Control Committee informed him on multiple occasions that it was his responsibility "to address the grade, drainage, and erosion issues" on his property. Appellants' App. Vol. 4 at 163. Similarly, Mike Hendershot, the general maintenance chair for the HOA, informed McAdams that the HOA was not responsible for diverting water flow from properties and that this was up to each homeowner. After investigation, the HOA believed that most of the water was originating from property owned by Chad Gregory at 4344 North Somerset Drive. The HOA also informed Paul and Mary Harnishveger, the owners of the property located at 4322 North Somerset Drive, that water flow was being blocked in their driveway and that the drainage pipe needed to be cleared.

[6] On February 3, 2016, the Owners filed a complaint for damages against the HOA asserting that the HOA breached its contractual obligations and failed to exercise reasonable care in the performance of its duties pursuant to the Covenants and Restrictions. The HOA filed its answer and a third-party complaint against Gregory and the Harnishvegers as third-party defendants.

[7] Thereafter, the Owners filed a motion for partial summary judgment for declaratory relief, requesting the trial court to declare as a matter of law that the HOA had a "non-delegable duty ... to maintain and repair the drainage ditch located on Somerset Drive for the health, safety, and welfare" of the Owners. Appellants' App. Vol. 2 at 108–09. The HOA responded with its own motion for summary judgment asserting, among other things, that a valid and enforceable exculpatory clause contained in the Covenants and Restrictions barred the Owners' claim for damages against the HOA.

[8] The trial court held a hearing on the pending summary judgment motions and, on June 27, 2017, issued its order granting the HOA's motion for summary judgment and denying the Owners' motion for partial summary judgment. Specifically, the trial court concluded that the Covenants and Restrictions contain a "valid, enforceable and applicable exculpatory clause as relates to any liability of [the HOA] for claims arising under [the Covenants and Restrictions](and resulting secondary documents) defining the rights and obligations of the parties." Id. at 12. The court further concluded that the HOA's "liability for any action or inaction regarding its rights or obligations to address water drainage created and governed by [the Covenants and Restrictions] is included within this exculpatory clause." Id. This appeal ensued.

Discussion and Decision

[9] The Owners contend that the trial court erred in denying their motion for partial summary judgment and granting summary judgment in favor of the HOA based upon the exculpatory clause in the Covenants and Restrictions.² "Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Alva Elec., Inc. v. Evansville–Vanderburgh Sch. Corp. , 7 N.E.3d 263, 267 (Ind. 2014) (citing Ind. Trial Rule 56(C) ). We review the grant or denial of a summary judgment motion de novo. Layne v. Layne , 77 N.E.3d 1254, 1264 (Ind. Ct. App. 2017), trans. denied . The filing of cross motions for summary judgment does not alter our standard of review, as we consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law. Roberts v. Henson , 72 N.E.3d 1019, 1026 (Ind. Ct. App. 2017). We may affirm an entry of summary judgment on any theory supported by the designated evidence. Alva Elec. , 7 N.E.3d at 267. The party appealing a summary judgment decision has the burden of persuading the appellate court that the grant or denial of summary judgment was erroneous. Knoebel v. Clark Cty. Superior Court No. 1 , 901 N.E.2d 529, 531–32 (Ind. Ct. App. 2009).

[10] We begin...