Walker v. Zeus Land Holdings LLC

• Decision Date: 04 February 2021
• Docket Number: No. 20190962-CA,20190962-CA
• Citation: 482 P.3d 268
• Parties: Russell WALKER, Denise Walker, Bryan Thomas, Kay Thomas, Tyler Hilton, Heather Hilton, Bret Bullock, Camille Bullock, Diane L'Etoile, Erik Nolte, Joseph Muscolino, Karen Muscolino, Steven Walters, and Dawn Walters, Appellants, v. ZEUS LAND HOLDINGS LLC, Jupiter Land 1 LLC, and Titan Land Holdings LLC, Appellees.
• Court: Utah Court of Appeals

482 P.3d 268

Russell WALKER, Denise Walker, Bryan Thomas, Kay Thomas, Tyler Hilton, Heather Hilton, Bret Bullock, Camille Bullock, Diane L'Etoile, Erik Nolte, Joseph Muscolino, Karen Muscolino, Steven Walters, and Dawn Walters, Appellants,

v.ZEUS LAND HOLDINGS LLC, Jupiter Land 1 LLC, and Titan Land Holdings LLC, Appellees.

No. 20190962-CA

Court of Appeals of Utah.

Filed February 4, 2021

Russell S. Walker, Salt Lake City, Attorney for Appellants

E. Barney Gesas, Richard D. Burbidge, and Carolyn J. LeDuc, Salt Lake City, Attorneys for Appellees

Judge Ryan M. Harris authored this Opinion, in which Judges Jill M. Pohlman and Diana Hagen concurred.

Opinion

HARRIS, Judge:

¶1 Over opposition from many of its neighbors, a lot owner subdivided its lot into two smaller lots. After the lot owner completed its subdivision, some of the neighbors (Neighbors) sued, claiming that the subdivision violated restrictive covenants applicable to the property. The district court entered summary judgment in favor of the lot owner, determining that the subdivision did not violate the restrictive covenants. We affirm.

BACKGROUND

¶2 In 2017, Zeus Land Holdings LLC (Zeus) acquired a lot in a subdivision (the Subdivision) located in Salt Lake County, Utah, and just weeks later conveyed that lot to Jupiter Land 1 LLC (Jupiter).¹ Since the Subdivision's inception, its lots have been subject to a set of restrictive covenants (the CC&Rs). The original version of the CC&Rs, recorded in 1940, limited each lot to "one detached single family dwelling" and mandated that "[n]o lot shall be resubdivided to contain less than 20,000 square feet." The CC&Rs were to "run with the land" and "be binding on all" lot owners in the Subdivision "until January 1, 1965, at which time [the CC&Rs would] be automatically extended for successive periods of ten years unless by a vote of the majority of the then owners of the lots it [was] agreed to change [the CC&Rs] in whole or in part."

¶3 As relevant here, the lot owners of the Subdivision twice amended the CC&Rs. In 1964, the provision restricting further subdivision of lots was amended to reduce the minimum resubdivided lot size from 20,000 to 9,000 square feet. Then in 1978, the lot owners again lowered the minimum resubdivided lot size, this time lowering the limit to 8,000 square feet. Following those amendments, some of the lots in the Subdivision were resubdivided into lots smaller than 20,000 square feet.² The 1978 amendment of the lot size provision was in effect at the time Jupiter acquired its lot in 2017.

¶4 Soon after acquiring its lot, Jupiter sought permission from local land use authorities to subdivide the lot into two smaller lots—the first measuring 8,075 square feet and the second measuring 13,655 square feet. Jupiter's effort—despite being facially compliant with the 1978 amendment to the CC&Rs—drew vocal opposition from many of the other lot owners in the Subdivision. One of those lot owners, Russell Walker, sent letters in May and June 2017 to Jupiter and Lane Halversen, purporting to "notify" them of the CC&Rs governing the use of Jupiter's property. The letters quoted the 1940 version of the CC&Rs, took the position that lots could not be resubdivided into parcels smaller than 20,000 square feet, and requested that Jupiter "comply with the restrictive covenants and not attempt to subdivide or build another structure" besides the existing single-family home on the lot.

¶5 In July 2017, some of the lot owners met to discuss their opposition to Jupiter's subdivision efforts, and several of them signed a paper expressing that opposition.³ At the top of the paper appear the words "PLEASE DO NOT SUBDIVIDE [JUPITER'S LOT]." Below that statement appear several signatures, addresses, and phone numbers. The paper does not include any additional substantive text and, on its face, does not purport to amend the CC&Rs.

¶6 Neither Walker's letters nor the signed paper dissuaded Jupiter from its subdivision efforts, and some weeks later, in the fall of 2017, Jupiter obtained final approval from local land use authorities for its requested subdivision. Thereafter, Jupiter conveyed one of the two newly subdivided parcels to Titan Land Holdings LLC (Titan), another entity controlled by Halversen. For ease of reference, from this point forward we refer to Zeus, Jupiter, Titan, and Halversen collectively as "Owner."

¶7 A few months later, Neighbors—some of the owners of lots in the Subdivision, whose names are listed above, in the caption—filed suit against Owner, asserting claims for breach of restrictive covenants and for injunctive and declaratory relief. In connection with their complaint, Neighbors filed a notice of lis pendens against the newly subdivided lots. In their complaint, Neighbors cited the 1940 version of the CC&Rs, and alleged that Owner's resubdivision violated those CC&Rs because its new lots were each smaller than 20,000 square feet. Owner responded by filing a counterclaim, asserting claims for quiet title, slander of title, and intentional interference with business relations.

¶8 Owner also filed a motion asking the district court to either release the lis pendens or, in the alternative, at least require Neighbors to post a bond. The court agreed with the alternative approach and ordered Neighbors to post a $65,000 bond to maintain the lis pendens. Neighbors opted to release the lis pendens rather than post the bond.

¶9 Both sides soon filed opposing motions for summary judgment. In its motion, Owner sought summary dismissal of all of Neighbors’ claims; in support of that motion, Owner cited the 1964 and 1978 amendments to the CC&Rs, and asserted that its resubdivision complied with the operative covenants. In their motion, Neighbors sought judgment in their favor on all their affirmative claims; in support of that motion, Neighbors continued to rely on the 1940 version of the CC&Rs, and asserted that Owner's resubdivision violated those covenants because the two new lots were smaller than 20,000 square feet. In addition, Neighbors argued that the July 2017 paper signed by several lot owners constituted an agreement "to reaffirm" the lot size restriction contained in the 1940 CC&Rs. The district court scheduled oral argument on the cross-motions for July 9, 2019.

¶10 On July 8, 2019, the day before the scheduled oral argument, eleven of the fifteen owners of lots in the Subdivision met and signed a document captioned "Amendment Amending and Reaffirming Restrictive Covenants in [the Subdivision]." The document purported to amend the lot size restriction in the CC&Rs as follows: "No lot shall be resubdivided to contain less than 20,000 square feet except as otherwise platted before March, 1982." The signatures on the document were not notarized, and the record contains no evidence that the document was ever recorded. Neighbors lodged the document with the district court on the day it was signed.

¶11 After full briefing and oral argument, the district court granted Owner's motion and denied Neighbors’ motion. The court determined that the 1964 and 1978 amendments were dispositive, and that Owner's resubdivision was in compliance with the operative language of the CC&Rs, as amended. The court rejected Neighbors’ argument regarding the 2017 paper, stating that the document was

simply a sheet of paper with a list of names (some signed, others printed) that states tersely at the top "PLEASE DO NOT SUBDIVIDE [OWNER'S LOT]." The document contains no formalities, the signatures are not notarized, and the document was never recorded. Even more fundamental, the document does not even purport to amend the existing covenants or place any restrictions on [Owner's] property. At most, the document is a polite request not to subdivide [Owner's lot]. In the [c]ourt's view, the July 2017 "vote" is insufficient as a matter of law to override the 1964 and 1978 Amendments and to breathe new life into the original lot size restriction.

And because the July 2019 document purporting to amend the CC&Rs was lodged with the court on the day before oral argument, after briefing was complete, the district court "decline[d] to consider it." During oral argument, Owner agreed to voluntarily dismiss its counterclaims in the event that it prevailed on its summary judgment motion. On August 7, 2019, based on its summary judgment ruling and Owner's stipulation, the court entered final judgment in Owner's favor and against Neighbors on Neighbors’ affirmative claims, and dismissed Owner's counterclaims without prejudice.

¶12 A few weeks later, Neighbors filed a motion to alter or set aside the judgment. In that motion, Neighbors asserted that their "notice to [Owner] of their opposition to the subdivision made [Owner] subject to" a 20,000-square-foot lot size restriction. In support of their contention, Neighbors cited Mouty v. Sandy City Recorder , 2005 UT 41, 122 P.3d 521. In a written ruling, the district court addressed and rejected Neighbors’ argument on its merits, and on that basis denied the motion.

ISSUES AND STANDARDS OF REVIEW

¶13 Neighbors now appeal, and ask us to consider three issues. First, Neighbors argue that the district court erred in granting summary judgment to Owner on Neighbors’ affirmative claims. "[W]e review a district court's grant of summary judgment for correctness, affording no deference to the court's legal conclusions." Poulsen v. Farmers Ins. Exch. , 2016 UT App 170, ¶ 8, 382 P.3d 1058. Second, and relatedly, Neighbors argue that the court erred in denying their motion to alter or set aside the summary judgment order. "A [district] court's decision to grant or deny a motion for a new trial is reviewed for an abuse of discretion. However, if the court's ruling is based upon a conclusion of law, we review the decision for correctness." Mardesich v. Sun Hill Homes LC , 2017 UT App 33, ¶ 11, 392 P.3d 950 (quotation simplified). Lastly, Neighbors assert that the court erred in ordering the lis pendens released...