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Felix Felicis, LLC v. Riva Ridge Owners Association

Supreme Court of Wyoming

June 30, 2016

FELIX FELICIS, LLC, a Wyoming limited liability company, and CAROL BAKER and MARK STEIN, Appellants (Plaintiffs),

         Appeal from the District Court of Teton County The Honorable Timothy C. Day, Judge

          Representing Appellants: James K. Lubing and Laurie J. Stern of Lubing Law Group, LLC, Jackson, Wyoming. Argument by Mr. Lubing.

          Representing Appellee Riva Ridge Owners' Association: Kim D. Cannon of Davis & Cannon, LLP, Sheridan, Wyoming; Leah C. Schwartz of Davis & Cannon, LLP, Cheyenne, Wyoming. Argument by Mr. Cannon.

          Representing Appellees Cody Mueller, John Campbell, John Jackson and Jeff Hussey: J. Denny Moffett of Moffett & Associates, P.C., Jackson, Wyoming.

          Before BURKE, C.J., and HILL, DAVIS, and KAUTZ, JJ., and FORGEY, D.J.

          KAUTZ, Justice.

         [¶1] The Appellants, Felix Felicis, LLC, Carol Baker and Mark Stein (hereinafter the Baker-Steins), filed a Complaint against the Appellees, Riva Ridge Owners Association and the members of the Association's Board of Directors and Site Committee, Cody Mueller, John Campbell, and Jeff Hussey, after the Site Committee rejected the Baker-Stein's building plans for their home and writer's studio in the Riva Ridge subdivision outside of Jackson, Wyoming. The Baker-Steins alleged breach of contract, tortious breach of the covenant of good faith and fair dealing, intentional interference with a contract and prospective economic advantage, injunctive relief, and punitive damages. The Baker-Steins then filed a Complaint for Declaratory Judgment, requesting that the district court determine the meaning of the term "principal residence site" in the covenants, and whether the Baker-Steins must receive permission from the Site Committee before planting trees for landscaping.

         [¶2] The district court granted summary judgment in favor of the Appellees on several issues including the breach of contract claim and that the Baker-Steins must gain Site Committee approval before planting trees for landscaping. Following a bench trial, the district court determined that the covenants intended to protect the landowners' views of the Tetons and interpreted "principal residence site" in a way that required complete invisibility between the homes in the Riva Ridge subdivision. The Baker-Steins appeal the district court's decisions. We affirm in part, and reverse and remand in part.


         [¶3] The Baker-Steins raise the following issues for our review:

1) In seeking to interpret an ambiguous restrictive covenant, did the [d]istrict [c]ourt err when it disregarded the intent of the drafter in its legal analysis and adopted the Restatement (Third) of Property: Servitudes § 4.1, which the [d]istrict court read to allow the court to focus on the intent of the collective property owners within the Riva Ridge subdivision rather than the intent of the drafters?
2) Did the [d]istrict [c]ourt err when it granted summary judgment to the homeowners' association on [the Baker-Steins'] claim for damages?
3) Did the [d]istrict [c]ourt err when it granted summary judgment to the homeowners' association on the issue of whether landscaping could be used as a visibility screen only if approved by the homeowners' association?


         [¶4] On December 19, 1996, Betty I. Lucas, Russell C. Lucas, James F. Lucas, Lynda E. Lucas, and Leeann K. Lucas (hereinafter collectively referred to as "the Declarant") signed a Declaration of Covenants, Conditions and Restrictions of Riva Ridge Tracts (covenants). Riva Ridge is an approximately 365 acre area in Teton County that the Declarant divided into seven tracts. Six of the tracts are approximately forty acres, while the seventh tract is just less than 118 acres. In the covenants, the Declarant stated that the property within Riva Ridge "contains significant wildlife habitat and is of high scenic and natural value, and Declarant is adopting the following Covenants, Conditions and Restrictions to preserve and maintain the natural character and value of the Property [Riva Ridge] for the benefit of all Owners of the Property or any part thereof." The covenants established the Riva Ridge Owners Association (the Association) of which every Riva Ridge tract owner is a member. The Association is managed by a three member Board of Directors, and the Board members also serve as the Association's Site Committee. The current members of the Board and Site Committee are Mr. Mueller, Mr. Campbell and Mr. Hussey. One of the Site Committee's duties is to consider and act upon building plan proposals for homes in Riva Ridge.

         [¶5] As most covenants do, the Riva Ridge covenants specify and restrict certain aspects of the proposed homes in the development. One such restriction addresses the visibility of the homes on the different tracts in the area. That section of the covenants states:

         Section 4. Site Design.

(a) Building Envelope. In order to provide for the maximum privacy and in order to maintain views from the principal residences on each of the Tracts without buildings or other structures in the foreground, building envelopes are hereby established for each of the Tracts. Each of the Tracts comprising the Property contains a principal residence building site which has been approved by Teton County as being in conformance with the skylining and scenic resource overlay regulations of Teton County. These building sites have not been approved by Teton County for actual construction, however, each building site has been examined and an environmental assessment prepared and submitted to Teton County and the recommendations set forth in the environmental assessment must be followed in gaining specific approval of a building site from Teton County. The designated building sites for each of the individual Tracts comprising the Property are as described on Exhibit "H" attached hereto and by this reference made a part hereof. Building envelopes for each of the Tracts, with the exception of Tract G, shall consist of a contiguous four-acre parcel of any shape or configuration determined by the Owner of each of the Tracts and which building envelope shall contain within it the designated building site. The building envelope for Tract G shall consist of a contiguous ten (10) acre parcel of any shape or configuration determined by the Owner of the Tract and which building envelope shall contain within it the designated building site. In configuring the building envelope for each Tract, the designated building site shall not be relocated without the approval of the Site Committee after compliance with all of the requirements set forth hereinafter for relocation of building envelopes. . . . The location of building envelopes shall be submitted with the site plan upon submission of building plans for approval for construction. No structure may be so constructed or placed within a building envelope so that it is visible from any principal residence site as designated on Exhibit "H", or from any principal residence site relocated pursuant to the provisions of these Covenants, Conditions and Restrictions.

         Exhibit H is a topographic map of the area that shows the seven different tracts and the acreage of each tract. Each tract contains a small square with the notation "Homesite" on it.

         [¶6] Article X, Section 8 of the covenants allows for the relocation of the building envelopes and the location of the "principal residence site" shown on Exhibit H with the Site Committee's approval under the following conditions:

(1) No portion of a house or principal residence constructed at the approved relocated principal residence site shall be visible from any designated principal residence site on any other Tract of the Property.
(2) The building envelope shall be so located surrounding the relocated principal residence site such that no structures constructed or to be constructed within the building envelope shall be visible from the designated principal residence site of any other Tract.
(3) The Site Committee may, as a condition of approval of relocation, impose additional restrictions on structures within a relocated building envelope or designated site, such as, but not necessarily limited to, size limitations and height restrictions, and such additional conditions or restrictions shall have the force and effect of all initial provisions of these covenants.

         [¶7] The covenants also require Site Committee approval before a tract owner can alter any part of the tract from its natural state. Specifically, Article VIII, Section 2(a) states:

. . . no excavation or other work which in any way alters any Tract from its natural or improved state existing on the date such Tract was first conveyed in fee by Declarants to an Owner shall be erected, placed, done or permitted to remain on any Structure or Tract until the plans, specifications and exterior material samples and color selections therefor have been approved in writing and a building permit has been issued by the Site Committee.

         Additionally, Article VIII, Section 3(o) states: "No on-site mining or other mineral extraction or Development activities shall be permitted on any Tract, including the removal of gravel; provided that excavation for construction, wildlife enhancement or landscape purposes may be permitted with the prior written approval of the Board."

         [¶8] The covenants were drafted by the Declarant's attorney, David Larsen. During the process, Mr. Larsen and a land surveyor, Sean O'Malley, went to Riva Ridge to look at the general area of what would become the seven tracts in the development. The two put a story pole on each of the tracts to make sure the plans would comply with county zoning regulations regarding scenic overlay and skylining.[1] They also used the story poles to determine the visibility of potential development on each tract from each of the other tracts in the development. They marked the designated spot where the story poles were placed on each tract with green fence posts, and those spots were marked on Exhibit H of the covenants as the "homesite" for the respective tract.

         [¶9] After the covenants were recorded, the Declarant began selling the tracts in Riva Ridge. Homer Luther purchased Tract A in July of 1998 and thereafter built a home on the property. Karla Tessler purchased Tract E and, according to Mr. Luther, in January of 2000 requested permission from the Association to relocate the principal residence site for that tract. According to Mr. Luther, the Association approved that request and at some point in time Ms. Tessler built a home on Tract E. The house is not built on or near the original principal residence site shown as the "homesite" on Exhibit H of the covenants. Cody Mueller purchased Tract E from Ms. Tessler in 2007, and Susan and John Jackson purchased Tract A from Mr. Luther in 2011.

         [¶10] The Baker-Steins purchased Tract B in December 2010, and they hired a Jackson architectural firm with prior experience designing homes in Riva Ridge to design their home and separate writer's studio. The Baker-Steins first submitted their plans to the Site Committee in November 2011, and despite submitting several amended proposals to address Site Committee concerns, the Site Committee rejected all versions of the plans. The Site Committee rejected the plans on the basis that some of the Baker-Steins' proposed home would be visible from some locations in the Mueller (being the same Mr. Mueller who is the president of the Association and on the Site Committee) and Jackson constructed homes, although those locations are not necessarily the "homesites" shown on Exhibit H of the covenants. The visibility from the Mueller and Jackson homes continued to be a problem even though the Baker-Steins changed the proposed height of their home from twenty-seven feet to twenty-two feet, while all of the other homes in the area are approximately thirty feet tall.

         [¶11] The Baker-Steins' proposed resolution to the visibility problem was to plant trees to block their home from the Mueller's and Jacksons' view. However, the Site Committee informed the Baker-Steins that the covenants do not allow them to mitigate any visibility of the proposed structures by planting trees. Further, the Site Committee concluded that, based upon Article VIII, Section 2(a) and 3(r)(1), the Baker-Steins need Site Committee approval before planting any trees on the property.

         [¶12] The Baker-Steins filed a Complaint for Damages and Injunctive Relief, claiming breach of contract, intentional interference with contract and prospective economic advantage, tortious breach of the covenant of good faith and fair dealing, and seeking injunctive relief and punitive damages. They also filed a Complaint for Declaratory Judgment wherein they sought a declaration from the district court regarding whether the term "principal residence site" in the covenants required that the Baker-Steins' proposed home be invisible from anywhere in the Mueller and Jackson homes, and whether the covenants require Site Committee approval before the Baker-Steins can plant trees on the property. The Appellees submitted a counterclaim for declaratory relief seeking a declaration from the district court that the authority to issue permits is vested in the Board of Directors and Site Committee, that the court does not have the authority to amend the Association's documents, ...

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