Tierra Ranchos Homeowners v. Kitchukov
| Decision Date | 09 August 2007 |
| Docket Number | No. 1 CA-CV 06-0474.,1 CA-CV 06-0474. |
| Citation | 216 Ariz. 195,165 P.3d 173 |
| Parties | TIERRA RANCHOS HOMEOWNERS ASSOCIATION, an Arizona corporation, Plaintiff/Counter-Defendant/Appellant, v. Todor KITCHUKOV and Mariana Kitchukov, husband and wife, Defendants/Counter-Claimants/ Appellees. |
| Court | Arizona Court of Appeals |
James E. Brown, P.C. By James E. Brown, Phoenix, Co-Counsel for Plaintiff/Counter-Defendant/Appellant.
Paul G. Ulrich, P.C. By Paul G. Ulrich, Pamela B. Petersen, Phoenix, Co-Counsel for Plaintiff/Counter-Defendant/Appellant.
Udall, Shumway & Lyons, P.L.C. By Roger C. Decker, Bret A. Maidman, Mesa, Attorneys for Defendants/Counter-Claimants/Appellees.
¶ 1 Tierra Ranchos Homeowners Association appeals from the trial court's summary judgment in favor of Todor and Mariana Kitchukov (the Kitchukovs). The trial court concluded that Tierra Ranchos acted unreasonably in refusing to approve the location of a detached garage built by the Kitchukovs. For the following reasons, we reverse and remand for further proceedings.
¶ 2 This appeal concerns a Gilbert subdivision known as Tierra Ranchos (the Subdivision). Tierra Ranchos Homeowners Association (Tierra Ranchos) is the homeowners' association for the Subdivision, which consists of eleven lots, each larger than one acre. The Kitchukovs own Lot 6 in the Subdivision.
¶ 3 The sole access to the Subdivision is Nielson Street, which runs north-south and forms the eastern boundary of the Subdivision. From Nielson Street, two cul-de-sacs provide access to the lots in the Subdivision. The Subdivision is bordered on the west by a Salt River Project canal. In the middle of the Subdivision is a large "ranchette," which divides the Subdivision into a northern half and a southern half. The ranchette itself is not a part of the Subdivision ¶ 4 The Kitchukovs' lot is situated in the northwest corner of the southern half of the Subdivision. It is bordered on the west by the canal and on the north by the ranchette. To the south and east of the Kitchukovs' property are other lots within the Subdivision.
¶ 5 All lot owners within the Subdivision are subject to a recorded Declaration of Covenants, Conditions and Restrictions (the CC & Rs). Pursuant to the CC & Rs, Tierra Ranchos created an Architectural Committee. Any lot owner intending to perform construction on or otherwise modify the appearance of a lot must obtain the prior written approval of the Architectural Committee. The CC & Rs give the Architectural Committee broad discretion to approve or disapprove proposed modifications:
The Architectural Committee may disapprove plans and specifications for any Construction or Modification if the Architectural Committee determines, in its sole and absolute discretion, that the proposed Construction or Modification violates any provision of this Declaration or the Design Guidelines. In addition, the Architectural Committee may disapprove plans and specifications for any Construction or Modification even though the plans and specifications may be in substantial compliance with this Declaration and the Design Guidelines if the Architectural Committee, in its sole and absolute discretion, determines that the proposed Construction or Modification, or some aspect or portion thereof, is unsatisfactory or aesthetically unacceptable.
The CC & Rs further provide that any approved construction or modification must be performed "in accordance with the plans and specifications approved by the Architectural Committee," and that no changes may be made without the prior written approval of the Architectural Committee.
¶ 6 In late 2003, the Kitchukovs submitted plans to the Architectural Committee for the construction of a guest house and detached garage on their property. The plans provided that the garage would be set back 82 feet from the north boundary of the lot and 5 feet from the west boundary of the lot. The plans were approved by the Architectural Committee in writing on December 2, 2003, and the Kitchukovs were advised that any changes or modifications would need to be resubmitted to the Architectural Committee.
¶ 7 Subsequently, the Kitchukovs modified the plans to relocate the guest house and garage closer to the north boundary of their property. Although the new plans allegedly were approved by the Town of Gilbert, the Kitchukovs did not resubmit the plans to the Architectural Committee. Sometime after construction began, the Architectural Committee advised the Kitchukovs they would need to resubmit their plans for approval of the new location of the guest house and garage.
¶ 8 The Kitchukovs submitted their new plans to the Architectural Committee on December 17, 2004. With respect to the garage, the new plans maintained the 5-foot setback from the west boundary of the lot but reflected only a 5- to 15-foot setback from the north property line. By letter dated January 5, 2005, the Architectural Committee advised the Kitchukovs that it had approved the relocation of the guest house but not the garage. The letter explained:
Upon review, the consensus was that the guest house was approved and the detached garage was not approved. The committee felt that we must stay consistent with all the other approved structures in the neighborhood. You are given a lot of lenience on the detached garage structure because you are along the canal and it doesn't affect your neighbors.
¶ 9 The Kitchukovs ceased construction and the parties and their counsel subsequently exchanged various correspondence concerning the Architectural Committee's disapproval of the garage location and the parties' participation in the dispute resolution process set forth in the CC & Rs. Sometime in April 2005, the Kitchukovs resumed construction over Tierra Ranchos' objections. Tierra Ranchos began to assess the Kitchukovs a $500.00 per day fine for the alleged violation.
¶ 10 On May 16, 2005, Tierra Ranchos filed a complaint against the Kitchukovs seeking injunctive relief and a declaratory judgment. Specifically, Tierra Ranchos sought a declaration that its Architectural Committee properly exercised its authority to disapprove the Kitchukovs' proposed garage construction and that the Kitchukovs improperly constructed the garage without obtaining the requisite approval. The Kitchukovs filed a counterclaim against Tierra Ranchos seeking a declaration that the Architectural Committee's disapproval of their plans for the garage was arbitrary and capricious and that the garage could remain on their property. The Kitchukovs also sought to invalidate the fines imposed by Tierra Ranchos.
¶ 11 The parties stipulated to the entry of a preliminary injunction pursuant to which the Kitchukovs agreed to cease construction and/or use of the garage. Subsequently, the parties filed cross-motions for summary judgment. Tierra Ranchos argued that a 5-foot north setback was "not aesthetically pleasing" in a "luxury [a]ssociation" consisting of lots larger than one acre and that its discretionary decision in that regard was entitled to deference. According to Tierra Ranchos, the Architectural Committee wanted to maintain uniform 25-foot minimum setbacks to preserve the open look and feel of the Subdivision. The Kitchukovs, on the other hand, contended that the location of their garage would not adversely impact any Subdivision property and that it was arbitrary and unreasonable for the Architectural Committee to "approve a five foot setback on the west side of the Kitchukovs' property but disapprove a five to fifteen foot setback on the north side given that neither the north or west sides abut any subdivision property."
¶ 12 At oral argument, the trial judge characterized the issue before the court as whether the decision of the Architectural Committee was "reasonable" or "arbitrary." Although the trial judge initially believed he "wouldn't need any factual decision making," he concluded after further consideration that "a site visit [would be] critical to the determination of whether [the Architectural Committee's decision was] reasonable or arbitrary." Accordingly, over Tierra Ranchos' objection, the trial judge appointed a Special Master to visit the Subdivision and report back to the court on a number of issues related to the location of the garage and its impact on neighboring properties.
¶ 13 The Special Master filed his report with the trial court on January 27, 2006. The Special Master Report included various factual observations and findings related to the appearance of the Kitchukovs' garage and its visibility and impact on the overall "openness" of the Subdivision. Tierra Ranchos filed numerous objections to the Special Master Report. The Kitchukovs urged the trial court to rely on the Special Master Report in deciding the cross-motions for summary judgment.
¶ 14 The trial court reconvened oral argument on the parties' cross-motions for summary judgment on March 27, 2006. After taking the matter under advisement, the trial court granted summary judgment in favor of the Kitchukovs and against Tierra Ranchos, finding, in relevant part:
The [Kitchukovs'] property has a unique location within the subdivision as it is bordered on the west by a Salt River Project Canal and on the north by a ranchette, not part of the Homeowners' Association. Given the property's location within the subdivision, the specific location of the garage minimizes its impact on the other members of the Homeowners' Association. Moving the garage to offset it further from the north boundary of the property would make it more visible to other members of the Homeowners' Association. Given the specific facts of the case, the court finds the decision of the Architectural Control Committee to deny approval of the garage location to be arbitrary,...
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