Evergreen Highlands Association v. West

73 P.3d 1 (2003)

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Nature of the Case

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Facts

Evergreen Highlands Association (D), is the homeowner association for Evergreen Highlands Subdivision. The subdivision consists of sixty-three lots, associated roads, and a 22.3-acre park area which is open to use by all residents of the subdivision. The Association holds title to and maintains the park area, which contains hiking and equestrian trails, a barn and stables, a ball field, a fishing pond, and tennis courts. The park area is almost completely surrounded by private homeowners’ lots. Robert A. West (P) owns one of the lots bordering directly on the park area and has used the facilities there to play tennis, fish, and walk his dog. Protective covenants for Evergreen Highlands were also filed in 1972, but did not require lot owners to be members of or pay dues to D. D was incorporated in 1973 for the purposes of maintaining the common area and facilities, enforcing the covenants, paying taxes on the common area, and determining annual fees. The developer conveyed the park area to the D in 1976. Between the years of 1976 and 1995, D relied on voluntary assessments from lot owners to pay for maintenance of and improvements to the park area. Article 13 of the original Evergreen Highlands covenants provides that a majority of lot owners may agree to modify the covenants. P purchased his lot in 1986 when membership in D and payment of assessments was voluntary, a fact that P contends positively influenced his decision to purchase in Evergreen Highlands. P was not among the majority of homeowners who approved the 1995 amendment to the covenants, and he subsequently refused to pay his lot assessment. The new covenant that was approved by the majority: (1) requires all lot owners to be members of the homeowners’ association, (2) assesses mandatory dues on all lot owners in the subdivision to pay for the maintenance of common areas, and (3) imposes liens on those lots whose owners fail to pay the mandatory dues. When D threatened to record a lien against his property, P filed this lawsuit challenging the validity of the 1995 amendment. D counterclaimed for a declaratory judgment that it had the implied power to collect assessments from all lot owners in the subdivision, and accordingly sought damages from P for breach of the implied contract. The district court ruled in favor of D on the ground that the amendment was valid and binding; therefore, it never reached the merits of D’s counterclaims. The court of appeals reversed, finding that the terms 'change or modify' as set forth in the modification clause of the covenants did not allow for the addition of a wholly new covenant, but only for modifications to the existing covenants. The court of appeals did not address the issue of whether D had the implied power to collect assessments from lot owners, and therefore whether P was in breach of an implied contract.