Westphal v. Lake Lotawana Ass'n, Inc.

• Decision Date: 28 January 2003
• Docket Number: No. WD 60791.,WD 60791.
• Citation: 95 S.W.3d 144
• Parties: H. Paul WESTPHAL, Appellant, v. LAKE LOTAWANA ASSOCIATION, INC., Respondent.
• Court: Missouri Court of Appeals

95 S.W.3d 144

H. Paul WESTPHAL, Appellant, v. LAKE LOTAWANA ASSOCIATION, INC., Respondent.

No. WD 60791.

Missouri Court of Appeals, Western District.

January 28, 2003.

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Mark H. Epstein, Kansas City, for Appellant.

Patrick B. Starke, Blue Springs, for plaintiff.

Before BRECKENRIDGE, P.J., HOWARD and HOLLIGER, JJ.

PATRICIA BRECKENRIDGE, Judge.

Mr. Westphal appeals from the dismissal of his lawsuit against Lake Lotawana Association, Inc. The trial court dismissed Mr. Westphal's petition for failure to state a claim upon which relief can be granted because he did not plead a necessary element of his claims, specifically that actions of the Association constitute state action. Mr. Westphal raises two points on appeal. First, he argues that the trial court erred in dismissing his declaratory judgment claim in Count I because he pled all of the necessary elements and no state action by the Association was required for him to be successful on this claim. Second, he contends that the trial court erred in dismissing his constitutional and statutory claims in Counts II, III, IV, and V because his petition alleged sufficient facts to establish that the Association's action is state action. Because this court finds that Mr. Westphal has alleged facts that, if proven, would entitle him to a declaration of his rights in his property encumbered by a restrictive covenant, the judgment of the trial court dismissing Count I is reversed and remanded. This court also finds that Mr. Westphal's petition failed to allege sufficient facts in Counts II, III, IV, and V to establish that the Association's action is state action, so the trial court's judgment dismissing Mr. Westphal's constitutional and statutory claims in those counts is affirmed.

Factual and Procedural Background

Since this is an appeal from a motion to dismiss for failure to state a claim upon which relief can be granted, this court takes as true the facts from Mr. Westphal's petition. Johnson ex eel. Wilken U. Jones, 67 S.W.3d 702, 704 n. 2 (Mo. App.2002). According to the petition, Mr. Westphal has owned unimproved property on Lake Lotawana since 1969. The Association is a Missouri not-for-profit corporation, which is organized as the representative body of the property owners at Lake Lotawana. All of the Lake Lotawana property, including Mr. Westphal's lot, is subject to a Declaration of Restrictions. This Declaration of Restrictions provides that Lake Lotawana and its common areas are to be used only by owners of lots in the subdivision and their guests. An Extension of Restrictions further provides that lot owners and their guests have license:

[T]o the reasonable use and privileges of the lake in said subdivision, namely: boating, bathing, fishing, ice skating, ice boating, the anchoring of boats and the use of the parkway along the shore line for swimming and fishing, all subject, however, to the supervision and direction of GRANTOR¹ and such rules and regulations as may be promulgated from time to time by the GRANTOR, and which licenses and privileges, or any of them, may at any time be wholly or partially abrogated, cancelled and withdrawn by the GRANTOR for the violation of any rule now in force or hereafter promulgated by the GRANTOR.

In 1997, Mr. Westphal purchased a personal watercraft. When he contacted the Association to register his personal watercraft for use on Lake Lotawana, he was told that because he purchased his personal watercraft in 1997, he did not need to register it immediately. He was also told that his personal watercraft would be "grandfathered" in and not subject to any new rules and regulations.

In 1998, Mr. Westphal filed a formal written registration for his personal watercraft with the Association. The Association denied his registration, however, based on a new rule. This rule, Section B1 of the Association's Rules and Regulations, provides that watercraft "shall not be registered to a lot unless there is a structure with restroom facilities; this structure must meet city codes. Watercraft property registered in 1997 and not complying shall continue to be eligible to the owner of record as registered in 1997."

Because Mr. Westphal did not have a restroom on his property and had not registered his personal watercraft in 1997, the Association precluded him from registering and operating his personal watercraft on the lake.

To put a restroom on his property, the Association required Mr. Westphal to install sanitary sewers. Mr. Westphal cannot obtain sanitary sewers, however, because the Association has failed and refused to extend sanitary sewers to his property and instituted a moratorium against anyone hooking into the existing sanitary sewer system.

The petition was filed on August 21, 2001, and included five counts. In Count I, Mr. Westphal sought a declaratory judgment; in Count II, he alleged a violation of substantive and procedural due process under the United States and Missouri Constitutions; Count III asserted a violation of equal protection under the Missouri Constitution; Count IV was premised on a violation of 42 U.S.C. § 1983; and, in Count V, he alleged inverse condemnation. Mr. Westphal sought damages in Counts II through V.

In response to Mr. Westphal's petition, the Association filed a motion to dismiss for failure to state a claim upon which relief can be granted. The trial court granted the Association's motion. Specifically, the trial court ruled that Counts I through IV of Mr. Westphal's petition required some kind of state action. In doing so, it noted that conduct of a private party may constitute state action if the government is "`so entwined' that it becomes a `joint participant.'" In this case, however, the trial court concluded that "it is difficult to accept the notion that a not-for-profit private corporation such as a lake property owners' association acts as an agent of the state." The court further held that the mere fact that the Association was subject to state regulation was insufficient to transform its conduct into state action. Concerning Count V, the trial court found that to prevail on a claim of inverse condemnation, Mr. Westphal had to allege facts to support a finding that the government appropriated his property for public use. The court ruled that Mr. Westphal had not alleged sufficient facts to support this finding because the Association is a private entity, and the Association was regulating the lake for the benefit of only its own members, and not the public. This appeal followed.

Standard of Review

A motion to dismiss for failure to state a claim is an attack on the plaintiff's pleadings. Bosch v. St. Louis Healthcare Network, 41 S.W.3d 462, 463 (Mo. banc 2001). When reviewing the grant of a motion to dismiss for failure to state a claim, this court considers that:

A motion to dismiss for failure to state a cause of action is solely a test of the adequacy of the plaintiff's petition. It assumes that all of plaintiff's averments are true, and liberally grants to plaintiff all reasonable inferences therefrom. No attempt is made to weigh any facts alleged as to whether they are credible or persuasive. Instead, the petition is reviewed in an almost academic manner, to determine if the facts alleged meet the elements of a recognized cause of action, or of a cause that might be adopted in that case.

Id. at 464 (quoting Nazeri v. Mo. Valley College, 860 S.W.2d 303, 306 (Mo. banc 1993) (internal citations omitted)).

Judgment is Final and Appealable

Mr. Westphal raises two points on appeal. Before reaching those points, however, this court must determine, sua sponte, whether it has jurisdiction to hear Mr. Westphal's appeal. Chromalloy Am. Corp. v. Elyria. Foundry Co., 955 S.W.2d 1, 3 (Mo. banc 1997). The trial court dismissed Mr. Westphal's petition without stating whether the dismissal was with or without prejudice. Thus, the dismissal is without prejudice. See Rule 67.03 (stating "[a]ny involuntary dismissal shall be without prejudice unless the court in its order for dismissal shall otherwise specify."). "The general rule is that a dismissal without prejudice is not a final judgment and, therefore, is not appealable." Chromalloy, 955 S.W.2d at 3. Nevertheless, "[w]hen the effect of the order is to dismiss the plaintiff's action and not the pleading merely, the judgment entered is final and appealable." Mahoney v. Doerhoff Surgical Servs., Inc., 807 S.W.2d 503, 506 (Mo. banc 1991). "[T]he judgment of dismissal — al-beit without prejudice — amounts to an adjudication on the merits and may be appealed." Id.

Here, the trial court, in effect, ruled that Mr. Westphal's counts require state action, and that, here, there is no state action because the Association is not a state agent. The trial court is not saying that Mr. Westphal has failed to plead the required elements of his claim. Instead, the trial court is effectively saying that Mr. Westphal can have no claim because the Association is not a state actor. Therefore, this dismissal is a judgment on the merits, "`such that a refiling of the petition ... would be a futile act'" and, consequently, the judgment is appealable. State ex rel. Dos Hombres-Independence, Inc. v. Nixon, 48 S.W.3d 76, 79 (Mo.App.2001) (quoting Helms v. Am. States Ins. Co., 886 S.W.2d 220, 221 (Mo.App.1994)).

Petition Alleged Necessary Elements for Declaratory Judgment

Turning to his first point on appeal, Mr. Westphal alleges that the trial court erred in dismissing his claim for declaratory judgment. Mr. Westphal argues that he pled all the necessary elements for declaratory judgment and the trial court wrongly concluded that state action was required for him to be successful on this claim.

"To state a claim upon which relief can be granted, a petition for declaratory judgment must invoke principles of substantive law, which if proven would entitle the plaintiff to a declaration of...