Prancing Antelope I, LLC v. Saratoga Inn Overlook Homeowners Association, Inc., 010721 WYSC, S-20-0052

Docket Nº:S-20-0052
Opinion Judge:GRAY, Justice.
Party Name:PRANCING ANTELOPE I, LLC, a Wyoming limited liability company; CHRIS SHANNON and CYNTHIA G. BLOOMQUIST, Appellants (Defendants), v. SARATOGA INN OVERLOOK HOMEOWNERS ASSOCIATION, INC., a Wyoming nonprofit corporation, Appellee (Plaintiff).
Attorney:Representing Appellants: C. M. Aron, Aron Law, Laramie, Wyoming. Argument by Mr. Aron. Representing Appellee: William L. Hiser, Brown & Hiser LLC, Laramie, Wyoming. Argument by Mr. Hiser.
Judge Panel:Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.
Case Date:January 07, 2021
Court:Supreme Court of Wyoming

2021 WY 3

PRANCING ANTELOPE I, LLC, a Wyoming limited liability company; CHRIS SHANNON and CYNTHIA G. BLOOMQUIST, Appellants (Defendants),

v.

SARATOGA INN OVERLOOK HOMEOWNERS ASSOCIATION, INC., a Wyoming nonprofit corporation, Appellee (Plaintiff).

No. S-20-0052

Supreme Court of Wyoming

January 7, 2021

Appeal from the District Court of Carbon County The Honorable Dawnessa A. Snyder, Judge

Representing Appellants: C. M. Aron, Aron Law, Laramie, Wyoming. Argument by Mr. Aron.

Representing Appellee: William L. Hiser, Brown & Hiser LLC, Laramie, Wyoming. Argument by Mr. Hiser.

Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.

GRAY, Justice.

[¶1] In conjunction with its development of the Saratoga Inn Overlook Subdivision (Subdivision), Orion Point, LLC (Orion Point), whose sole members are Cynthia Bloomquist and Chris Shannon, designated a common area for the enjoyment of all Subdivision lot owners and established the Saratoga Inn Overlook Homeowners Association, Inc. (HOA1). HOA1 was administratively dissolved, and Ms. Bloomquist unilaterally formed another Saratoga Inn Overlook Homeowners Association, Inc. (HOA2). Ms. Bloomquist then sold Orion Point's remaining lots in the Subdivision. Subsequently, Ms. Bloomquist conveyed the common area to Prancing Antelope I, LLC-another limited liability company that she owned with Mr. Shannon. HOA2 brought this action against Ms. Bloomquist, Mr. Shannon, and Prancing Antelope I, LLC (collectively, Prancing Antelope), asserting claims for quiet title, ejectment, breach of fiduciary duty, conversion, and punitive damages. The district court granted summary judgment to HOA2 on its claim for ejectment. After a bench trial, it entered judgment in favor of HOA2 on its claim for breach of fiduciary duty and awarded punitive damages in the amount of $35, 000. Prancing Antelope appeals. We affirm.

ISSUES

[¶2] The issues are: 1. Was HOA2 entitled to summary judgment on its claim for ejectment?

2. Does W.R.C.P. 19 require the joinder of members of HOA1?

3. Did the district court abuse its discretion when it awarded attorneys' fees as damages?

FACTS

[¶3] The following facts are undisputed and were before the district court on the parties' cross-motions for summary judgment.

A. The Saratoga Inn Overlook Subdivision and Lot 1

[¶4] In 2007, Ms. Bloomquist and Mr. Shannon were the only members of Orion Point. Orion Point owned a large parcel of land in Saratoga, Wyoming, and Lot 1, Block 1 (Lot 1) of a separate subdivision-the Saratoga Inn Country Club Subdivision #1.

[¶5] Ms. Bloomquist, as a member of Orion Point, developed a residential subdivision on Orion Point's large parcel of land. Ms. Bloomquist formed HOA1 and incorporated it on October 18, 2007, as a "Mutual Benefit" corporation pursuant to Wyoming law. The Articles of Incorporation stated:

ARTICLE I

The name of the nonprofit corporation shall be

Saratoga Inn Overlook Homeowners Association, Inc.

The duration of the corporation shall be perpetual.

. . .

ARTICLE VI

On dissolution of the corporation, any assets of the corporation shall be distributed to the then members of the corporation on the same prorata [sic] basis as each member is entitled to cast votes.

[¶6] Orion Point conveyed Lot 1 to HOA1 as a common area. Ms. Bloomquist filed a Declaration of Covenants, Conditions and Restrictions for Saratoga Inn Overlook Subdivision (Covenants).

[¶7] The Covenants provided that "[t]he Homeowners Association shall own Saratoga Inn Country Club Subdivision #1, Block 1, Lot 1 located on the south side of Pic Pike Road" and that "Lot 1, owned by Saratoga Inn Overlook Homeowners Association, Inc. is dedicated for the common use and enjoyment of the Subdivision, Lot and Home Owners." The Covenants also stated: ARTICLE 1 DEFINITIONS

Section 1.9. "Homeowners Association" or "Association"

Shall mean the Saratoga Inn Overlook Homeowners Association, Inc., a Wyoming non-profit corporation, its successors and assigns established to administer and enforce the terms and conditions of these Covenants. The Homeowners Association shall own Saratoga Inn Country Club Subdivision # 1, Block 1, Lot 1 located on the south side of Pic Pike Road.

Section 1.14 "Saratoga Inn Overlook" Shall mean and refer to the Subdivision known as Saratoga Inn Overlook including the aforementioned common areas.

ARTICLE 2 PROPERTY RIGHTS

Section 2.1. Owners' Right to Use.

Every Owner shall have a right to use and enjoy the Common Area south of Pic Pike Road which shall belong to the Homeowners Association and shall pass with the title to every Lot . . . . The common area rights granted to the Homeowners' Association shall be exclusive to its members, families, and guests and in no event may the Homeowners' Association convey to any third parties not so related an interest in this easement.

ARTICLE 3 ASSOCIATION MEMBERSHIP AND VOTING

Section 3.1 Association Membership.

Each record owner of a Lot shall be a member of the Homeowners Association. Membership shall be appurtenant to and may not be separated from ownership of a Lot.

[¶8] Ms. Bloomquist formalized the Bylaws of HOA1 on February 18, 2011. The Bylaws provide that the "Saratoga Inn Overlook Homeowners Association . . . shall be comprised of owners of lots in the [Subdivision] . . . . Lot owners automatically become members of the association upon purchase of a lot and shall remain a member during the period of ownership." The Bylaws also provide: The lands and improvements constructed and located on the lands included in the [Covenants] are subject to the use and ownership as set forth and are subject to the terms, covenants, conditions, easements, and restrictions, uses, limitations, and obligations, all of which shall be deemed to run with the land, shall be a burden and a benefit to Declarant and any person acquiring or owning an interest in the real property and improvements, their grantees, successors or assigns.

[¶9] Originally, Orion Point owned all lots in the Subdivision, associated with HOA1. Ms. Bloomquist served as a board member and president of HOA1 from its inception until its dissolution.

B. Dissolution of HOA1 and Formation of HOA2

[¶10] Beginning in December 2010 and thereafter, HOA1 failed to file annual reports with the Wyoming Secretary of State. In 2012, HOA1 was administratively dissolved for failure to pay state corporate taxes. Three years later, in 2015, Ms. Bloomquist attempted to reinstate HOA1, but the statutory time for reinstatement had passed. Ms. Bloomquist solved this dilemma by filing new articles of incorporation identical to those of HOA1. Her actions created a second homeowners association, Saratoga Inn Overlook Homeowners Association, Inc. (HOA2), with the same name, articles of incorporation, bylaws, and covenants as HOA1. Ms. Bloomquist served as a board member and president of HOA2.

C. Sale of Orion Point's Interests

[¶11] In 2016, Ms. Bloomquist and Mr. Shannon entered into negotiations to sell Orion Point's thirty remaining lots to TDC Properties, LLC, a limited liability company owned by Kathy and Bryan Drake (collectively, the Drakes). The negotiations and contract documents did not distinguish between HOA1 and HOA2. The contract to purchase the properties was contingent on proof of the HOA ownership of Lot 1.1 To satisfy this contingency, Ms. Bloomquist provided Schedule A of the O&E (ownership and encumbrance) title report reflecting title to Lot 1 vested in the "Saratoga Inn Overlook Homeowners Association, Inc."

[¶12] Orion Point conveyed all its remaining lots in the Subdivision to TDC Properties, LLC, on November 30, 2016. This left Orion Point with no property in the Subdivision and vested title of the majority of the Subdivision properties in TDC Properties, LLC. On December 12, 2016, the Drakes were elected officers for HOA2. This terminated Ms. Bloomquist as a board member and president.

D. Transfer of Lot 1

[¶13] Approximately seven months later, Ms. Bloomquist, as "President/Director of Saratoga Inn Overlook Homeowners Association, Inc.," executed a warranty deed transferring Lot 1 to a limited liability company, Prancing Antelope I, LLC. Ms. Bloomquist and Mr. Shannon were the sole members of this LLC. The deed contains no restrictions or burdens related to the Covenants or the Subdivision lot owners' right of access.

E. Proceedings Below

[¶14] HOA2 sued Prancing Antelope asserting claims for quiet title, ejectment, breach of fiduciary duty, and conversion. Prancing Antelope moved to join additional parties. It argued that the members of HOA1 on the date of its dissolution must be joined as parties pursuant to W.R.C.P. 19(a)(1) and (2). The district court denied the motion. The parties filed cross-motions for summary judgment. Prancing Antelope sought summary judgment based on its argument that HOA2 has no legal interest in Lot 1; HOA2 sought partial summary judgment on its claims to quiet title and for ejectment.

[¶15] The district court denied Prancing Antelope's motion for summary judgment and denied HOA2's motion for summary judgment as it related to quiet title. The district court granted summary judgment on HOA2's claim of ejectment. It concluded that HOA2 was a successor to HOA1 and the owner of Lot 1. A bench trial was held on the remaining issues.2 The district court issued findings of fact and conclusions of law in favor of HOA2 on its claim for breach of fiduciary duty and awarded $35, 000 in punitive damages. Prancing Antelope appeals.

DISCUSSION

I. Was HOA2 entitled to summary judgment on its claim for ejectment?

[¶16] Prancing Antelope presents two issues. First, it contends that HOA1's Articles of...

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