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College Book Centers, Inc. v. Carefree Foothills Homeowners’ Association - 10/26/2010

Arizona Court of Appeals Division One Holds That An HOA’s Approval of Two CC&R Violations Among Seventy-Six Parcels Cannot Constitute Waiver and a CC&R Non-Waiver Clause Is Enforceable Absent a Complete Abandonment of the CC&Rs.


Carefree Foothills is a residential subdivision made up of seventy-six lots, each of which is subject to a CC&R provision prohibiting non-residential structures.  The CC&Rs also provide that the failure to enforce any provision will not result in the subsequent waiver or abandonment of the right to enforce such restriction in the future.  Lot 24 is an undeveloped parcel located on a cul-de-sac and adjacent to a nine-acre parcel known as the Mamie Maude Mining Claim.  Mamie Maude is not part of Carefree Foothills and is divided into a northern and southern portion by a steep slope.  At one time, Mamie Maude was allegedly accessible by Sentinel Rock Road to the north, but this road does not currently provide legal access.  Vanyo purchased Lot 24 and Mamie Maude in March 2005.  Although Vanyo’s predecessors-in-interest had submitted a plan to the HOA to build a roadway across Lot 24 to provide access to Mamie Maude’s lower portion which was rejected by the HOA, Vanyo asserted that he was unaware of the access problems at the time he agreed to purchase the properties.  Following the close of escrow, Vanyo submitted a proposal to build a roadway across Lot 24, which the HOA again rejected. 

Vanyo brought suit against the HOA alleging that the HOA’s denial of his proposal to construct a road prevented him from accessing Mamie Maude.  Vanyo sought a declaratory judgment that: (1) the HOA waived the restriction by approving two other roadways in the division, (2) Vanyo was entitled to an implied way of necessity across Lot 24, or, alternatively, (3) Vanyo was entitled to obtain a statutory private way of necessity across Lot 24 and entitled to obtain an easement by condemning the lot owners’ interest in the CC&R provision prohibiting non-residential structures.  After both sides unsuccessfully moved for summary judgment, all three claims were tried to a jury.  The Jury found in favor of Vanyo on his claim that the HOA waived its ability to enforce the CC&R provision and did not decide either of the other two claims as the special verdict form instructed them not to continue if they found waiver.  The trial court denied the HOA’s renewed motions for JMOL on all claims and awarded Vanyo $100,000 in attorneys’ fees.  The HOA appealed.

The Court of Appeals held that the trial court erred in not granting the motions for JMOL on the waiver and implied way of necessity claims.  The Court found that Vanyo did not dispute that a roadway was in violation of the provision prohibiting non-residential structures.  To establish waiver, therefore, Vanyo was required to prove that there were frequent violations of the CC&R provision prohibiting non-residential structures.  The Court found that, even assuming that the two roadways alleged by Vanyo violated the CC&R provision, two violations out of seventy-six lots are not sufficient as a matter of law to constitute frequent violations such that a jury might reasonably infer waiver.  Further, even assuming that the two violations could be considered frequent, the CC&R provision stating that the failure to enforce any provision will not result in the subsequent waiver or abandonment of the right to enforce that provision renders the restriction enforceable by the HOA so long as the prior violations did not constitute a complete abandonment of the CC&Rs.  Burke v. Voicestream Wireless Corp. II, 207 Ariz. 393, 398, 87 P.2d 81, 87 (2004).  The Court rejected Vanyo’s argument that the non-waiver provision, like that in Burke, was solely intended to protect the HOA from unintentionally waiving its enforcement rights through inaction rather than shielding the HOA from the consequences of affirmatively approving violations.  The Court found that the record did not support Vanyo’s assertion that the HOA affirmatively approved the other two roadways and the law does not recognize a distinction between waiver of a CC&R provision by action or inaction.  In either event, the failure to enforce the provision falls within the plain language of the non-waiver clause. 

With regards to the implied way of necessity claim, the Court held that Vanyo failed to establish a prima facie case under the common law.  To make a showing, Vanyo was required to prove that: (1) Mamie Maude and the surrounding land were under common ownership, (2) Mamie Maude was severed, (3) Mamie Maude had no outlet at that time, and (4) access across the surrounding land was reasonably necessary when the severance occurred.  While the land’s common ownership was undisputed, the Court found that nothing in the record established that Mamie Maude was landlocked in 1912 when severance occurred.  The Court rejected Vanyo’s assertion that because there was never any “recorded” access to Mamie Maude, the only logical conclusion is that there has never been any “legal” access and held that Vanyo was required to provide at least some evidence showing that the property was landlocked.  Additionally, the Court noted that a 1909 survey depicted three roads crossing the center portion of Mamie Maude.

The Court of Appeals, however, upheld the trial court’s denial of the HOA’s motion for JMOL on Vanyo’s claim that he has the statutory right to privately condemn the provision of the CC&Rs prohibiting non-residential structures.  A.R.S. § 12-1202(A) provides that an owner of land “which is so situated with respect to the land of another that it is necessary for its proper use and enjoyment to have and maintain a private way of necessity over, across, through, and on the premises, may condemn and take lands of another, sufficient in area for the construction and maintenance of the private way of necessity.”  The statutory right of condemnation arises only when no other access exists by common law and the person seeking to condemn can establish that a reasonable necessity exists.  The Court noted that Vanyo was unable to establish his right to an implied way of necessity.  He was, therefore, merely required to demonstrate that the removal of the non-residential restriction was reasonably necessary for the proper use and enjoyment of Mamie Maude.  Because the jury never reached this issue, the Court held that Vanyo is entitled to a new trial on his claim for private condemnation.   

The Court of Appeals vacated the award of attorneys’ fees to Vanyo and awarded the HOA reasonable fees and costs on appeal in addressing the waiver issue. 

Judge Brown authored the opinion; Judges Orozco and Norris concurred.

Posted by: Christina C. Rubalcava

Posted On: 11/18/2010