Cattail Creek v. Thompson

Majority Dirk M. Sandefur

10/03/2019 DA 18-0539 Case Number: DA 18-0539 IN THE SUPREME COURT OF THE STATE OF MONTANA 2019 MT 233N CATTAIL CREEK COMMUNITY ASSOCIATION, a Montana nonprofit corporation, Plaintiff and Appellee, v. PETER THOMPSON, Defendant and Appellant. APPEAL FROM: District Court of the Eighteenth Judicial District, In and For the County of Gallatin, Cause No. DV 15-636CX Honorable Rienne McElyea, Presiding Judge COUNSEL OF RECORD: For Appellant: Peter Thompson, Self-represented, Bozeman, Montana For Appellee: Wayne Jennings, Jennings Law Office, P.C., Bozeman, Montana Submitted on Briefs: May 8, 2019 Decided: October 1, 2019 Filed: q3,,---,6mal•-.— 4( __________________________________________ Clerk  Justice Dirk M. Sandefur delivered the Opinion of the Court. ¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court Internal Operating Rules, this case is decided by memorandum opinion and shall not be cited and does not serve as precedent. Its case title, cause number, and disposition shall be included in this Court’s quarterly list of noncitable cases published in the Pacific Reporter and Montana Reports. ¶2 Peter Thompson (Thompson) appeals the 2018 judgment of the Montana Eighteenth Judicial District Court, Gallatin County, granting Cattail Creek Community Association (Association) specified injunctive relief enforcing a subdivision covenants building restriction. We affirm. ¶3 Cattail Creek Subdivision is a major, multi-phase, mixed-use subdivision in Bozeman, Montana. The developer obtained subdivision approval in three phases—Phase 1 in 2002 (37 lots), Phase 2A/2B in 2003 (73 lots), and Phase 3 in 2005 (66 lots). Upon filing each final plat, the developer recorded a set of protective covenants governing that phase. All three covenant sets were substantially similar in pertinent part. ¶4 Each covenant set provided that all land in each plat “shall be held, sold, conveyed, . . . occupied, and improved subject to” those covenants and any subsequent amendments thereto. Each set provided that the covenants: are intended to enhance the desirability and attractiveness of the land . . . [and] shall run with the land and shall be binding upon all person[s] having or who acquire any right, title or interest in and to the land, and shall inure to the benefit of the Declarant, the Association and each person who becomes an owner of the land. 2  Each set defined the “Association” as the “Cattail Creek Community Association” and “empowered [it] with” all “rights” and duties specified therein and as may be subsequently amended. Each set provided that every owner or contract purchaser of a subdivision lot is “a member of the Association” and that “[m]embership shall be appurtenant to . . . the ownership of any lot.” ¶5 Inter alia, each covenant set expressly prohibited building on subdivision land except in accordance with “plans and specifications” previously approved by the Association. The building restriction further expressly required that an approved structure “must be erected and completed within one year from the date of approval.”1 Each set included the following remedies for enforcement of the building restriction: If any structure is commenced and is not completed in accordance with the [approved] plans and specifications within one year, the Directors of the Association, at their option, may take such action as may be necessary, in their judgment, to improve the appearance so as to make the property harmonious with other properties and to comply with these Covenants, including completion of the exterior or the combination thereof, or removing the uncompleted structure or similar operations. The amount of any expenditure made in so doing shall be an obligation of the owner. A lien on the property may be recorded and shall be enforceable by an action at law. In lieu thereof, the Association may take such action as is available by law, including an injunction, or for damages. ¶6 In 2006, an agent of the subdivision developer incorporated the referenced Association as a Montana non-profit corporation. Upon a meeting of the membership of 1 Each set provided for a Cattail Creek Design Committee vested with the “the right to exercise control over all construction in the Cattail Creek Subdivision.” 3  all three phases, the combined membership elected a single nine-member board of Association directors—three elected by the membership of each phase. In 2007, a question arose as to whether the board should be administering the larger subdivision in unison as a single subdivision or, alternatively, as three separate subdivisions. Acting pursuant to an affirmative advisory vote of the combined membership of each phase, the board subsequently drafted a single set of proposed covenants, substantively similar to those originally governing each individual phase, for submission to a membership vote as a consolidating amendment of the original covenant sets. Upon appropriate approval, the new single set of covenants would supersede the original three sets and govern all three phases of the larger subdivision under the administration of the consolidated Association. In January 2008, the board submitted the proposed single-subdivision covenants to a membership vote by mail ballot election. Upon the affirmative vote of 75% of the members of all three phases, as counted at a noticed board meeting on March 26, 2008, the board declared the proposed single-subdivision covenants amendments duly approved.2 The board subsequently recorded the new covenants in the official real property records of Gallatin County on May 15, 2008. In pertinent part, the new covenants carried forward, as 2 It is unclear on the record whether the affirmative vote count consisted of 75% of the membership of each phase or merely 75% of the membership of all three phases. Each set of original covenants defined and referenced only a single homeowners association and then provided that the requisite vote for amendment was “three-quarters (3/4) of the total votes of each class of Owners of lots then within Cattail Creek Covenants.” Each set defined the term “Cattail Creek” as the land described for each phase. The Association heard no objection from any subdivision lot owner regarding the 2008 election procedure or outcome. 4  applied to the larger subdivision as a whole, the same or substantially similar provisions and restrictions set forth in the original covenant sets for governance of each respective subdivision phase. ¶7 On February 8, 2008, while mail voting was still in progress on the 2008 covenants amendment,3 Thompson purchased Lot 7 in Block 9 of Phase 2A/2B. While aware that the covenants amendment issue was pending, he did not have the opportunity to vote on the proposed covenants amendment because the prior Lot 7 owner (Richard Embry) had voted in the election prior to the conveyance. After acquiring the lot, Thompson applied for Association approval of his proposed building plans and specifications for a new home.4 The Association design committee subsequently approved Thompson’s building plans and specifications on March 6, 2008. Thompson thereafter accordingly commenced construction under a building permit independently issued by the City of Bozeman (City). ¶8 Despite the one-year construction deadline, construction remained incomplete a year later. Though it contemplated having to pursue covenant enforcement remedies against Thompson, the Association board took no immediate action. In 2010, after extending or renewing Thompson’s building permit when construction was still incomplete earlier that year, the City issued him a limited occupancy permit authorizing occupancy of 3 The mail ballots and informational packet went out into the mail to the membership in January 2008. The specified deadline for return of the ballots was March 10, 2008. 4 Thompson thus applied for and received design approval from the Association’s design review committee under the original 2003 covenants for phase 2A/2B. 5  the lower level of the home pending completion of the rest of the project. When construction was still incomplete in 2012, Thompson asked for the Association’s continued forbearance based on his representation that he could complete construction by February 2013. When construction was still incomplete on July 30, 2013, the City revoked the limited occupancy permit but took no other action. Thompson then continued to reside in the incomplete home. ¶9 In August 2015, with significant exterior features still substantially incomplete after seven years, the Association filed a district court complaint seeking an injunction enjoining Thompson from further occupancy of the home pending completion of construction, recovery of delinquent association dues, and attorney fees.5 Upon service of process, Thompson appeared and filed a series of pro se motions for dismissal, judgment on the pleadings, summary judgment, and Rule 11 sanctions. After he unsuccessfully petitioned this Court for supervisory control, the case proceeded to bench trial. The District Court subsequently issued detailed findings of fact, conclusions of law, and judgment rejecting Thompson’s various asserted defenses, finding him in breach of the one-year construction completion deadline,6 concluding an injunction enjoining him from further occupancy pending completion of various outstanding exterior features was necessary to remedy the 5 The complaint also sought an injunction enjoining Thompson from parking a large truck on subdivision property. 6 The court noted that the Association’s claims for recovery of delinquent association dues and other injunctive relief were moot due to corrective action taken by Thompson prior to trial. 6  breach, and determining that the Association was entitled to attorney fees pursuant to the attorney fees provision in the covenants. After conducting an attorney fees hearing, the court entered a final judgment enjoining Thompson from further occupancy of the home unless he completed construction of certain exterior features in 90 days. The court awarded the Association $88,532.50 in attorney fees with costs and interest. After a series of unsuccessful post-trial motions, Thompson timely appealed. ¶10 We review lower court findings of fact only for clear error. Ray v. Nansel, 2002 MT 191, ¶ 19, 311 Mont. 135, 53 P.3d 870. Findings of fact are clearly erroneous only if not supported by substantial evidence, the court misapprehended the effect of the evidence, or, based on our review of the record, we have a definite and firm conviction that the lower court was mistaken. Larson v. State, 2019 MT 28, ¶ 16, 394 Mont. 167, 434 P.3d 241; Interstate Prod. Credit Ass’n of Great Falls v. DeSaye, 250 Mont. 320, 323, 820 P.2d 1285, 1287 (1991). We review conclusions and applications of law de novo for correctness. In re Marriage of Bessette, 2019 MT 35, ¶ 13, 394 Mont. 262, 434 P.3d 894; Steer, Inc. v. Mont. Dep’t of Revenue, 245 Mont. 470, 475, 803 P.2d 601, 603 (1990). We review discretionary rulings, including rulings on trial administrative issues and post-trial motions, for an abuse of discretion. City of Missoula v. Girard, 2013 MT 168, ¶ 10, 370 Mont. 443, 303 P.3d 1283. An abuse of discretion occurs if a court exercises granted discretion based on a clearly erroneous finding of material fact, an erroneous conclusion or application of law, or otherwise acts arbitrarily, without conscientious judgment, or in excess of the 7  bounds of reason, resulting in substantial injustice. Larson, ¶ 16; City of Missoula v. Mountain Water Co., 2018 MT 139, ¶ 9, 391 Mont. 422, 419 P.3d 685. ¶11 District court findings of fact, conclusions of law, and exercises of discretion are presumed correct. Hellickson v. Barrett Mobile Home Transp., Inc., 161 Mont. 455, 459, 507 P.2d 523, 525 (1973). The appellant has the burden of demonstrating error on appeal. In re Marriage of McMahon, 2002 MT 198, ¶ 7, 311 Mont. 175, 53 P.3d 1266; Hellickson, 161 Mont. at 459, 507 P.2d at 525. ¶12 Thompson first asserts that the District Court erroneously failed to dismiss the Association’s claim for enforcement of the covenants due to lack of standing. “A plaintiff has legal standing to assert an otherwise cognizable claim only if (1) the claim is based on an alleged wrong or illegality that has in fact caused, or is likely to cause, the plaintiff to personally suffer specific, definite, and direct harm to person, property, or exercise of right and (2) the alleged harm is of a type that available legal relief can effectively alleviate, remedy, or prevent.” Larson, ¶ 46. To the extent discernible from his appellate “brief,”7 Thompson challenges the Association’s standing based on alleged irregularities in the incorporation of the Association as a distinct legal entity and the 2008 amendment of the original phase-specific covenant sets. He essentially asserts that, due to those irregularities, the Association had no authority to enforce the one-year construction deadline against him. 7 Thompson did not file an appellate brief in conformance with M. R. App. P. 1(1) and 12. At the extreme outer limit of reasonableness, we have generously construed his “Rule 29 Motion to Dismiss” as an appellate brief. 8  ¶13 However, like the 2008 single subdivision covenants that superseded them, the original 2003 Phase 2A/2B covenants expressly vested the referenced homeowners association with authority to enforce the covenants’ building restriction by judicial action for monetary and injunctive relief. Nothing in the express language of the 2003 covenants, or superseding 2008 covenants, precludes the referenced homeowners association from incorporating. Thompson has not demonstrated that the alleged incorporation irregularities precluded the Association from enforcing the covenants’ construction deadline as the association referenced in the covenants. To the extent that the 2008 amendment vote may have been insufficient to amend and supersede the original Phase 2A/2B covenants, Thompson and his lot would nonetheless remain bound and subject to the original 2003 covenants and included one-year building restriction and enforcement remedies. We hold that the District Court did not erroneously fail to dismiss the Association’s claim against Thompson due to lack of standing. ¶14 Thompson next asserts that the District Court erroneously failed to dismiss the Association’s complaint, grant him judgment on its claims, or grant post-trial relief from judgment. Whether asserted under M. R. Civ. P. 12(b)(6), 12(c), 56, 59(b), or 60(b), Thompson essentially asserts that the injunctive relief sought by the Association was not an available or proper remedy either as a matter of law on the pleadings or on the subsequently developed factual record in this case. However, our review of the pleadings and the record clearly indicates that the Association had standing to enforce the one-year construction deadline under the 2003 or 2008 covenants, Thompson clearly breached and 9  remained in breach of the deadline, the 2003 and 2008 covenants authorized injunctive relief to enforce the deadline, and Thompson has not shown that the injunction imposed by the District Court was an abuse of discretion under § 27-19-102, MCA.8 We hold that the District Court did not erroneously grant the Association the imposed injunctive relief. ¶15 Thompson next asserts that the District Court abused its discretion under M. R. Civ. P. 16, and violated his constitutional right to due process of law, by: (1) ordering the parties sua sponte to submit a proposed pretrial order without explicitly ordering them to confer; (2) issuing the Association’s proposed scheduling order without conducting a scheduling conference; and (3) not postponing litigation in this matter pending resolution of his related building code dispute with the City of Bozeman. However, Rule 16 does not require district courts to conduct a pretrial conference prior to issuing a scheduling order in every case. See M. R. Civ. P. 16(a)-(b). In pertinent part, Rule 16 generally provides only that: Upon request . . . [and] except in categories of actions exempted by district court rule, the judge must issue a scheduling order after consulting with the parties’ attorneys and any unrepresented parties at a scheduling conference or by . . . other means. M. R. Civ. P. 16(b)(1) (emphasis added). 8 A district court may grant a “final injunction . . . to prevent the breach of an obligation existing in favor of the applicant where: (1) pecuniary compensation would not afford adequate relief; (2) it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief; [or] (3) the restraint is necessary to prevent a multiplicity of judicial proceedings.” Section 27-19-102, MCA. 10  ¶16 The record reflects that Thompson did not request a scheduling conference before the District Court issued a scheduling order. The court did not act sua sponte until seven and a half months after he first appeared and until after he had engaged in substantial motion practice prior to answering the Association’s complaint. When it did act sua sponte in accordance with customary practice, the District Court ordered the parties to submit a stipulated scheduling order within 30 days. Upon their failure to reach an agreement, the Association timely filed a proposed scheduling order. Thompson did not. ¶17 The District Court duly considered Thompson’s subsequent objections to the scheduling order. He has not shown that the court acted arbitrarily or without conscientious judgment. He has further not shown that his building code/permit compliance dispute with the City of Bozeman had any bearing as a matter of law or fact on whether he was in compliance with the construction deadline independently imposed by the governing private covenants. We hold that Thompson has not met his burden of showing that the District Court abused its discretion, or otherwise denied him due process of law, in administering the pretrial schedule or proceedings. ¶18 Thompson next asserts that the District Court abused its discretion, and denied him due process of law, by denying his request for a jury trial. However, in the wake of his pretrial payment of delinquent association dues and an adverse summary judgment ruling disposing of his counterclaim in tort, the only claim or remedy still at issue prior to trial was the Association’s claim for injunctive enforcement of the covenants. In that circumstance, the District Court denied Thompson’s request for a jury trial pursuant to 11  Talley v. Flathead Valley Cmty. Coll., 259 Mont. 479, 491, 857 P.2d 701, 708 (1993) (“injunction is an equitable remedy fashioned according to the circumstances of a particular case . . . addressed to the discretion of the trial court”), and City of Great Falls v. Forbes, 2011 MT 12, ¶ 18, 359 Mont. 140, 247 P.3d 1086 (right to jury trial in “litigation involving both equitable and legal claims” but not regarding a “purely equitable action”). We hold that the District Court did not abuse its discretion, or otherwise deny Thompson due process of law, by denying him a jury trial on the Association’s claim for injunctive enforcement of the covenants. ¶19 Thompson finally asserts that the District Court abused its discretion, and denied him due process of law, when it eventually barred him from filing additional post-trial motions. However, prior to the court foreclosing any further motion practice, Thompson was able to file a series of post-trial motions including two motions for sanctions pursuant to M. R. Civ. P. 11, a Rule 59(b) motion, and three separate Rule 60(b) motions. In denying Thompson’s second and third Rule 60(b) motions and then barring him from any further post-judgment motion practice, the District Court found that: this action [started] three years ago. Since that time, [Thompson] has done everything in his power to delay these proceedings. [He] continues to file motions raising arguments that have previously been addressed by this Court’s [o]rders, requiring both the Plaintiff and the Court to expend unnecessary time and resources in addressing frivolous motions. [Thompson’s] Rule 59(b) Motion and first Rule 60(b) Motion were more of the same, especially considering the motions were identical. . . . [His] attempts to further delay full resolution of this matter must come to an end. [Thompson] may seek relief from the Montana Supreme Court in accordance with the Appellate Rules of Procedure, but he has exhausted the post-judgment remedies available from this Court. 12  Despite this clear and unambiguous admonition, Thompson filed yet another Rule 59(b) motion on September 4, 2018. ¶20 While the District Court did not explicitly act pursuant to M. R. Civ. P. 11, it nonetheless had broad discretion to sanction frivolous or vexatious conduct under Rule 11(b). Thompson has not shown, and there is no record indication, that the court’s failure to conduct a show cause hearing prejudiced his substantial rights in any material regard. Under the particular circumstances of this case, we hold that the District Court did not abuse its discretion, or otherwise deny Thompson due process of law, by foreclosing any further motion practice after his second and third motions for Rule 60(b) relief. ¶21 We further hold that, pursuant to the attorney fees provision in the covenants, the Association is further entitled to the cost of reasonable attorney fees incurred on appeal. We therefore remand this matter for determination of the cost of reasonable attorney fees incurred by the Association on appeal. ¶22 We have determined to decide this case pursuant to Section I, Paragraph 3(c) of our Internal Operating Rules, which provides for memorandum opinions. This appeal presents no constitutional issues, no issues of first impression, and does not establish new precedent or modify existing precedent. ¶23 Affirmed and remanded. /S/ DIRK M. SANDEFUR 13  We concur: /S/ JAMES JEREMIAH SHEA /S/ BETH BAKER /S/ LAURIE McKINNON /S/ JIM RICE 14