Turner v. Alta Mira Vill. Homeowners Ass'n, Inc.

• Decision Date: 24 December 2014
• Docket Number: No. 2 CA-CV 2013-0151,2 CA-CV 2013-0151
• Parties: EDWARD TURNER AND STEFFI TURNER, HUSBAND AND WIFE, Plaintiffs/Appellants/Cross-Appellees, v. ALTA MIRA VILLAGE HOMEOWNERS ASSOCIATION, INC., AN ARIZONA NONPROFIT CORPORATION, Defendant/Appellee/Cross-Appellant.
• Court: Arizona Court of Appeals

EDWARD TURNER AND STEFFI TURNER,HUSBAND AND WIFE, Plaintiffs/Appellants/Cross-Appellees, v. ALTA MIRA VILLAGE HOMEOWNERS ASSOCIATION, INC.,AN ARIZONA NONPROFIT CORPORATION, Defendant/Appellee/Cross-Appellant.

No. 2 CA-CV 2013-0151

ARIZONA COURT OF APPEALS DIVISION TWO

December 24, 2014

THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.

NOT FOR PUBLICATION

See Ariz. R. Sup. Ct. 111(c); Ariz. R. Civ. App. P. 28(c).

Appeal from the Superior Court in Pima County

No. C20124490

The Honorable Carmine Cornelio, Judge

AFFIRMED

COUNSEL

Munger Chadwick, P.L.C., Tucson

By Mark E. Chadwick

Counsel for Plaintiffs/Appellants/Cross-Appellees

Monroe, McDonough, Goldschmidt & Molla, P.L.L.C., Tucson

By Negatu Molla and Michael S. Shupe

Counsel for Defendant/Appellee/Cross-Appellant

MEMORANDUM DECISION

Chief Judge Eckerstrom authored the decision of the Court, in which Presiding Judge Miller and Judge Espinosa concurred.

ECKERSTROM, Chief Judge:

¶1 Edward and Steffi Turner (Turners) appeal from the trial court's order denying their request for injunctive or declaratory relief and refusal to grant attorney fees. Alta Mira Village Homeowners Association, Inc. (Alta Mira HOA) cross-appeals, asserting the court erred in denying its motion to join essential parties and in not granting its attorney fees. For the reasons that follow, we affirm the judgment of the trial court.

Factual and Procedural Background

¶2 In an appeal after a bench trial, we view the evidence in the light most favorable to sustaining the judgment. Cimarron Foothills Cmty. Ass'n v. Kippen, 206 Ariz. 455, ¶ 2, 79 P.3d 1214, 1216 (App. 2003). The Turners are residents of the Alta Mira neighborhood. The homes in the neighborhood were originally constructed by two or three different developers with several different individualized custom styles. All residents of the neighborhood are required to comply with certain provisions set forth in the "Declaration of Covenants, Conditions, and Restrictions" (CC&Rs). In order to implement the provisions of the CC&Rs, Alta Mira HOA has adopted three sets of architectural standards, in 1999, 2005, and 2010.

¶3 The Turners conducted a review of the neighborhood and found approximately seventy conditions which, they claimed, violated the various architectural standards. In March 2010, the Turners wrote a letter to an Alta Mira HOA representativerequesting enforcement action against the claimed violators. In October 2010, Alta Mira HOA issued a letter stating that "architectural and/or landscaping inconsistencies" would be "grant[ed] a variance or grandfather[ed]." This became known as the "grandfather letter."

¶4 In 2012, the Turners filed suit, claiming breach of contract, breach of fiduciary duty, breach of duty of good faith and fair dealing, and seeking declaratory and injunctive relief.¹ The trial court found the grandfather letter invalid because it was not properly approved by the Alta Mira HOA Board of Directors. The court also concluded that Alta Mira HOA had not breached any contract or legal duties and denied the Turners' requested injunction. The court denied both parties' requests for attorney fees. This appeal and cross-appeal followed.

Declaratory/Injunctive Relief

¶5 The Turners sought declaratory relief that the grandfather letter was "revoked and/or null and void" and injunctive relief to require Alta Mira HOA to "enforce Section 8.1 of the CC&R's in a uniform and consistent manner through the community." The trial court granted a declaratory judgment regarding the grandfather letter, but denied the requested injunction. The Turners assert the court erred in this denial.

¶6 "An injunction is an equitable remedy," and "[t]he discretion in injunctive proceedings lies with the trial court." Scholten v. Blackhawk Partners, 184 Ariz. 326, 331, 909 P.2d 393, 398 (App. 1995), supp. op. "We review the court's ruling concerning the availability of an equitable remedy de novo as an issue of law," Murphy Farrell Dev., LLLP v. Sourant, 229 Ariz. 124, ¶ 21, 272 P.3d 355, 361 (App. 2012), but "[t]he grant or denial of injunctive relief 'is within the sound discretion of the trial court, and its decision will not be reversed absent an abuse of that discretion.'" Horton v. Mitchell, 200 Ariz. 523, ¶ 12, 29 P.3d 870, 873 (App. 2001), quotingValley Med. Specialists v. Farber, 194 Ariz. 363, ¶ 9, 982 P.2d 1277, 1280 (1999). The Turners claim the trial court abused its discretion because it erred as a matter of law in finding Alta Mira HOA had not breached a contract or a duty, and also erred in applying waiver and laches.

Breach of Contract

¶7 In an action for breach of contract, the burden is on the plaintiff to prove the contract was breached and damages resulted. Thomas v. Montelucia Villas, LLC, 232 Ariz. 92, ¶ 16, 302 P.3d 617, 621 (2013). "We defer to a trial court's factual findings and will not set them aside on appeal 'unless they are clearly erroneous or not supported by substantial evidence.'" Sholes v. Fernando, 228 Ariz. 455, ¶ 6, 268 P.3d 1112, 1115 (App. 2011), quoting Nordstrom, Inc. v. Maricopa County, 207 Ariz. 553, ¶ 18, 88 P.3d 1165, 1170 (App. 2004). Whether a contract has been breached is generally a question for the finder of fact. See Matson v. Bradbury, 40 Ariz. 140, 144, 10 P.2d 376, 378 (1932); see also Ramada Franchise Sys., Inc. v. Motor Inn Inv. Corp., 755 F. Supp. 1570, 1580-81 (S.D. Ga. 1991) (applying Arizona law). In Arizona, "CC&Rs constitute a contract between the subdivision's property owners as a whole and individual lot owners." Ahwatukee Custom Estates Mgmt. Ass'n v. Turner, 196 Ariz. 631, ¶ 5, 2 P.3d 1276, 1279 (App. 2000).

¶8 The trial court found no breach of contract for a number of reasons, including its conclusion that Alta Mira HOA had discretion in some of its decision making regarding enforcement. The Turners maintain the trial court erred in so finding.

¶9 Specifically, they claim that Arizona case law and the CC&Rs provide that enforcement against violations is mandatory, not discretionary. The cases cited by the Turners to support this proposition involve enforcement against specific violations. See Johnson v. Pointe Cmty. Ass'n, 205 Ariz. 485, ¶¶ 28-32, 73 P.3d 616, 621-22 (App. 2003) (board had no discretion to waive provision forbidding exposed electrical wiring or to allow change to external stucco without application for approval); Ekstrom v. Marquesa at Monarch Beach Homeowners Ass'n, 86 Cal. Rptr. 3d 145, 157-58 (Ct.App. 2008) (requiring HOA to take action to enforce against overgrown palm trees).

¶10 Under these cases, Alta Mira HOA would not have discretion to ignore any specific, proven violations of the CC&Rs. But the Turners concede they have never sought "an order requiring enforcement action for each violation," and that they "do[] not request that the Trial Court enforce any particular violation of the Declaration or architectural controls." Rather, they base their request for the injunction on their claim that Alta Mira HOA has failed to diligently and uniformly enforce the CC&Rs.

¶11 Nor did the trial court find that Alta Mira HOA had the discretion to refuse to enforce against any specific violation. Rather, the court found that the Turners had failed to prove Alta Mira HOA had breached a contract by failing to enforce the CC&Rs. In so finding, the court noted that "some of the claimed 'violations' or 'inconsistencies' may have been (or were) constructed by" developers who were not subject to the CC&Rs,² while others "were approved, with Mr. Turner disagreeing . . . as to the appropriateness of approval. Some he thought were not approved when in fact they were."

¶12 Furthermore, the court found that "[f]or most violations Mr. Turner was unable to identify the date or time frame of the improvement or change," which was important because "many of Mr. Turner's complaints are that there is a lack of compliance with the 2010 guidelines. These cannot be applied retroactively to previous changes." While the court agreed that Alta Mira HOA had occasionally lapsed in requiring owners to secure permission before making any exterior changes to their homes, as required by the CC&Rs, the court concluded that this requirement had "for the most part" been followed. Finally, the court noted that Alta Mira HOAhas historically conducted bi-monthly tours of the neighborhood to take note of violations and presently continues to do so.

¶13 These factual findings, which the Turners have not shown to be clearly erroneous, see Sholes, 228 Ariz. 455, ¶ 6, 268 P.3d at 1115, amply support the trial court's conclusion that Alta Mira HOA had not failed to diligently enforce the CC&Rs.

Breach of Fiduciary Duty

¶14 The Turners next claim Alta Mira HOA breached its fiduciary duty to the Turners as homeowners in the neighborhood. In Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195, ¶¶ 24-27, 165 P.3d 173, 179-80 (App. 2007), this court adopted the approach of the Restatement (Third) of Property (Servitudes) § 6.13 (2000) in determining what duties an HOA owes to its members.³ The Restatement provides that an HOA has, in addition to "duties imposed by statute and the governing documents," duties:

(a) to use ordinary care and prudence in managing the property and financial affairs of the community that are subject to its control;

(b) to treat members fairly;

(c) to act reasonably in the exercise of its discretionary powers including rulemaking, enforcement, and design-control powers;

(d) to provide members reasonable access to information about the association, the common property, and the financial affairs of the association.

Id. The Restatement also imposes the burden of proving a breach of duty by the association on the member asserting the breach. Id.

¶15 The Turners have not specified which of these duties they believe Alta Mira HOA has breached. To the extent their claim is based on Alta Mira HOA's alleged failure to enforce the CC&Rs, we have addressed...