In the Missouri Court of Appeals 

Eastern District

DIVISION FOUR

THE ARBORS AT SUGAR CREEK ) No. ED99730

HOMEOWNERS ASSOCIATION, INC., )

ET AL., )

)

 Plaintiffs/Appellants, ) Appeal from the Circuit Court of

 ) St. Louis County

vs. )

) Honorable Gloria Clark Reno

JEFFERSON BANK & TRUST )

COMPANY, INC., )

)

 Defendant/Respondent/Cross-Appellant, )

) Filed: October 28, 2014

AND )

)

MCKELVEY HOMES, LLC, )

)

 Defendant/Respondent. )

I. INTRODUCTION

Ten residents and homeowners of a subdivision located in St. Louis County 

(―Homeowners‖) appeal the trial court‘s judgment dismissing their petition for

declaratory judgment and claims for damages, and granting declaratory relief in favor of 

Jefferson Bank & Trust Co., Inc. (―Bank‖) and McKelvey Homes, L.L.C. 

(―McKelvey‖).

1 Homeowners raise six points. Their first point challenges the trial court‘s 

 

1 The Arbors at Sugar Creek Homeowners Association remains listed as a plaintiff in the caption, 

yet the final amended petition filed by the plaintiffs in this case does not refer to the entity, and this entity 

has abandoned all of its claims. 
2

ruling on partial summary judgment that the neighborhood association Bank formed is 

authorized to govern the subdivision. Homeowners‘ remaining points challenge the 

court‘s entry of final judgment, contending the trial court erred in: (2) finding that Bank 

did not violate the subdivision‘s covenants when it appointed its own executives—nonresidents of the subdivision—to the neighborhood association‘s board of directors; (3) 

finding that Bank‘s executives acted reasonably and not in bad faith when, in their 

capacity as directors, they approved McKelvey‘s plans to develop houses in the 

subdivision; (4) finding McKelvey‘s construction plans do not violate the subdivision‘s 

architectural covenants; (5) ordering Homeowners to reimburse Bank for certain 

subdivision maintenance costs allegedly incurred by Bank; and (6) entering judgment in 

favor of Bank and McKelvey on Homeowners‘ remaining claims for damages. Bank

raises two points on cross-appeal, arguing the trial court erred in dismissing on summary 

judgment its counterclaims for slander of title and abuse of process. We affirm in part, 

reverse in part, and remand for further proceedings consistent with this opinion.

II. FACTUAL AND PROCEDURAL BACKGROUND

The events giving rise to this appeal continued to unfold even after Homeowners

filed their initial petition for injunctive relief in St. Louis County Circuit Court. 

Accordingly, there were a number of amended pleadings and pre-trial proceedings. The 

facts pertinent to this case are therefore somewhat dense and difficult to follow. We do 

our best to summarize them here.

In 2005 and 2006, Evolution Developments L.L.C. (―Developer‖) received two

loans from Bank, secured by deeds of trust, to purchase and develop ―The Arbors at 

Sugar Creek Subdivision,‖ an eighteen-lot residential subdivision in St. Louis County 
3

(the ―Subdivision‖). By end of 2009, Developer had built and sold to Homeowners the 

first five homes in the Subdivision. 

The parties agree all eighteen lots are subject to an indenture recorded in May

2006 with the St. Louis County Recorder of Deeds, entitled, ―The Declaration of 

Covenants, Conditions and Restrictions‖ (the ―Declaration‖). The Declaration controls 

―the general plan of development . . . [for] all [eighteen lots] . . . for the mutual benefit of 

[Developer] and all persons who may purchase, hold or own . . . the [lots].‖ It lays out 

rules for governance of the Subdivision and provides for the creation of a neighborhood 

association to enforce its covenants and restrictions. The Declaration originally called for 

creation of a neighborhood association called ―The Arbors at Sugar Creek Homeowners‘ 

Association,‖ (―Arbors Association‖) and required that the association be ―organized . . . 

not later than the first conveyance of title to a Lot.‖ The Declaration describes various 

covenants and restrictions, including architectural design criteria for the construction of 

new houses. The architectural covenants also provide that no owner shall construct any 

―new Unit‖ on a Lot ―without prior written consent of the Board.‖ In approving or 

rejecting any proposed construction, ―the Board shall consider harmony of exterior 

appearance with the existing improvements in the Subdivision, including architectural 

design, height, grade, topography, drainage . . . , color and quality of exterior materials 

and detail, location, construction standards, and other such criteria.‖ As Developer‘s 

lender, Bank consented by affidavit to the terms of the Declaration and recorded with the 

St. Louis County Recorder of Deeds its agreement to subordinate the deeds of trust to the 

Declaration.
4

Consistent with the Declaration, Developer created the original neighborhood 

association, Arbors Association, in 2005. However, Developer failed to appoint officers 

or directors to Arbors Association‘s board, conduct any meetings, or file with the 

Missouri Secretary of State the annual registration reports required by law. Consequently, 

the Secretary of State administratively dissolved Arbors Association in 2006.

2

In March 2010, Developer defaulted on Bank‘s loans, and Bank acquired the 

Subdivision‘s remaining thirteen undeveloped lots through foreclosure. Bank then 

entered into discussions with various developers regarding the future of the unsold lots

before executing an option agreement with McKelvey for the purchase of the unsold lots. 

The agreement granted McKelvey the option to purchase, build upon and sell the 

remaining lots. Under the terms of the agreement, Bank agreed to ―designate and 

appoint‖ directors to the Subdivision‘s neighborhood association. Bank would then 

―cause‖ the Subdivision‘s neighborhood association ―to review‖ a master set of 

McKelvey‘s architectural plans for homes that ―McKelvey intends to construct,‖ and 

―either approve such plans . . . or advise [McKelvey] with reasonable specificity of any 

objections‖ and propose revisions that would then cause the plans to be approved.

Defendants agreed to split the profits (25% to Bank and 75% to McKelvey). When

McKelvey began advertising its construction plans, however, Homeowners formed their 

own neighborhood association and appointed a ―Design Review Committee‖ to review 

the plans depicted in McKelvey‘s marketing materials. Following the Committee‘s 

review of the plans, Homeowners notified Defendants that the Design Review Committee

had determined the construction plans were in violation of the Declaration‘s architectural 

 

2 On appeal, no party contends that a valid neighborhood association existed at the time this 

lawsuit was filed.
5

covenants. In May 2010, having failed to persuade Defendants to alter the construction 

plans, Homeowners brought suit.

In their initial petition, Homeowners sought only declaratory judgment against 

Defendants. They alleged that Bank and McKelvey planned to build ―tract homes‖ that

violated the Declaration‘s architectural covenants and restrictions, ―in numerous respects 

including, but not limited to: architectural style; height; exterior construction materials, 

including . . . vinyl siding . . . roofing shingles; location of the home on the lots; and 

value.‖ Homeowners requested, in relevant part, a declaratory judgment from the court as 

to ―whether the plans of the Bank and McKelvey for construction of new homes in the

Subdivision violate the [architectural] Covenants.‖ At the same time, Homeowners also 

recorded with the St. Louis County Recorder of Deeds a notice of lis pendens, providing 

notice to third parties that a lawsuit affecting the unsold lots was pending.

In June 2010, before answering Homeowners‘ petition, Defendants obtained a 

building permit to construct a model home in the Subdivision. Consequently, 

Homeowners filed a motion for a temporary restraining order to enjoin Defendants ―from 

initiating or continuing any construction‖ during the pendency of the action. After a 

hearing, the trial court denied Homeowners‘ motion for a temporary restraining order.

Without elaboration, the court also ruled that Homeowners could ―refile‖ their motion for 

a temporary restraining order ―at a future date.‖ 

Thereafter, Defendants filed their answers to Homeowners‘ petition for 

declaratory judgment. Bank‘s answer included counterclaims that, later amended, sought 

a declaratory judgment against Homeowners on the same issues presented, as well as 
6

damages for: (1) slander of title and (2) abuse of process, due to the notice of lis pendens 

that Homeowners had filed with their petition.

After Homeowners filed their petition for declaratory judgment, Bank acquired 

from Developer an assignment of ―all of‖ Developer‘s ―rights, title and obligations . . . 

under the Declaration.‖ In September 2010, because the Subdivision‘s original 

neighborhood association had been dissolved, Bank formed the ASC Homeowners‘ 

Association, Inc. (―ASC HOA‖), and called a meeting of lot owners. At this meeting, 

Bank exercised its bloc of thirteen lot-ownership votes (or 72% of the total lot-owner 

votes)

3

to amend the Declaration, replacing the name Arbors Association with the name 

ASC HOA.

4 Bank elected three of its executives to serve on the board of directors for 

ASC HOA. In November 2010, these three directors approved McKelvey‘s plans for 

construction of houses on the Subdivision‘s lots.

Bank also filed a motion for partial summary judgment ―with respect to the issue 

of whether [ASC HOA] is the duly authorized successor homeowners‘ association of [the 

Subdivision].‖5 Homeowners opposed the motion. After an evidentiary hearing, the trial 

court granted Bank‘s motion for partial summary judgment, ruling that ASC HOA is the 

Subdivision‘s ―duly authorized homeowners association.‖6

After the court granted partial summary judgment to Bank, Homeowners called an 

ASC HOA meeting in early 2011, to elect three Subdivision residents to ASC HOA‘s 

 

3 As explained more fully, infra, the Declaration allows that it ―may be amended by vote or 

agreement of the Owners of Lots to which sixty-seven percent (67%) of the votes in the Association are 

allocated.‖

4 As so amended, the Declaration currently designates ASC HOA as the Subdivision‘s governing 

neighborhood association.

5

 Bank, however, specifically requested that the court refrain from determining whether or not 

Bank was authorized to appoint its own executives to the Board, an issue we discuss infra.

6 However, per Bank‘s request, the court made ―no ruling regarding the legitimacy of the current 

board of directors for [ASC HOA].‖
7

board of directors. Bank attended the meeting, and exercised its majority bloc of thirteen

lot-ownership votes to reject Homeowners‘ three nominees. Bank then voted to amend 

the Declaration a second time, removing language in the Declaration that stated only 

residents could serve on ASC HOA‘s board of directors.

7

Following this second 

amendment to the Declaration, Bank voted to ―ratify‖ its executives‘ prior actions,

approving McKelvey‘s development plans, including its plans to build a house on Lot 13 

(the ―Lot 13 Home‖).8 Bank then voted again to elect its own non-resident executives to 

serve on ASC HOA‘s board of directors.

While this suit was pending in circuit court, McKelvey began constructing the Lot 

13 Home. Homeowners then filed another motion for a temporary restraining order and 

preliminary injunction against further construction. In their motion, Homeowners argued

that Defendants had ―violated the Declaration‖ by grading the land and beginning 

construction of the Lot 13 Home (1) without receiving approval of a ―properly 

authorized‖ board of directors and (2) in violation of the ―architectural requirements 

of . . . the Declaration.‖ Bank opposed the motion. The court held an evidentiary hearing 

over the course of two days, and denied Homeowners‘ motion.

In December 2011, Homeowners filed a ―Combined Motion for Partial Summary 

Judgment‖ regarding Bank‘s counterclaim for slander of title and abuse of process. The 

next day, Homeowners filed their fourth and final amended petition against Defendants.

In their amended petition, Homeowners alleged, in relevant part that: (1) under the terms 

of the Declaration, the ASC HOA should have been composed of residents of the 

 

7 Bank also voted to remove language from the Declaration requiring that the neighborhood 

association‘s board of directors ultimately be composed of lot owners ―other than Declarant [the person 

originally defined as Developer].‖

8 The parties under contract to purchase the home on Lot 13 are not parties to this action.
8

Subdivision; (2) ―none of the Bank executives elected by the Bank to serve as board 

members were or are residents of the Subdivision;‖ (3) ―Bank deleted the board 

membership [residency] requirements . . . from the Covenants,‖ and (4) ―deletion of these 

requirements violates the Covenants, which intended to protect [H]omeowners in the 

Subdivision by guaranteeing them exclusive membership on the board after the Period of 

Declarant Control [expired].‖ Homeowners‘ first count sought declaratory judgment 

regarding, inter alia, ―whether the Bank‘s deletion of certain membership requirements 

found in the Covenants for the board of [ASC HOA] was valid.‖ Arguing further:

―Bank is not the  ̳Declarant‘ as that term is defined in the Covenants . . . 

Bank does not have authority to govern the Subdivision; [and] Bank‘s 

deletion of certain membership requirements found in the Covenants for 

the board of Bank HOA was not valid or authorized. All actions taken by 

the Bank‘s executives, as purported board members of [ASC HOA], are 

ultra vires, null and void.‖

In addition to Homeowners‘ first count seeking declaratory judgment and an 

injunction against Bank and McKelvey regarding their current development plans, 

Homeowners added four counts seeking damages. Specifically, Homeowners alleged: (1) 

Bank breached its fiduciary duty to Homeowners because ―Bank owes fiduciary duties to 

Homeowners due to its self-proclaimed  ̳Declarant‘ status and due to its majority position 

in [ASC HOA];‖ (2) ―civil conspiracy‖ against Defendants for causing ―a modification‖ 

of the Subdivision‘s previously-approved ―Subdivision Landscape Plan,‖ when they 

removed ―71 trees planned for a tree-lined streetscape,‖ in violation of the Declaration;

(3) ―tortious interference‖ against Defendants for taking ―several steps to cause a breach 

of [the Declaration],‖ thereby interfering with Homeowners‘ ―expectancies‖ arising out 

of the Declaration; and (4) ―nuisance‖ against Defendants for, inter alia, beginning 
9

―construction of a tract house‖ in violation of the ―architectural requirements contained 

in . . . the [Declaration].‖ 

Defendants timely filed their answers. Additionally, Bank contested 

Homeowners‘ motion for partial summary judgment on Bank‘s counterclaims, and filed a 

cross-motion, seeking partial summary judgment on the same counts raised in its 

counterclaim (i.e., slander of title and abuse of process). 

Soon thereafter, Homeowners filed a second motion for partial summary 

judgment against both Defendants on the issue of ―why the Bank‘s executives . . . are not 

proper board members under the recorded indenture that governs the subdivision.‖ 9In 

this motion, Homeowners argued that Bank‘s executives ―fail the Declaration‘s eligibility 

requirements‖ and, therefore, could not validly serve on ASC HOA‘s board of directors 

because they were not residents of the Subdivision. Homeowners further argued that 

―Bank‘s purported amendment to the Declaration—to remove those requirements its 

executives failed to meet—is invalid under Missouri law.‖ Among the reasons offered by 

Homeowners as to why Bank‘s amendment, removing the residency requirement, was 

invalid under the law, was that the amendment resulted in Bank breaching its ―duty of 

good faith and fair dealing‖ under the Declaration. Homeowners‘ motion requested that 

the court: ―declare that the board of the [ASC HOA] is not—and has never been—

properly constituted . . . [and] rule and declare that all actions taken by the [ASC HOA] 

are null and void.‖

On February 9, 2012, the trial court held an evidentiary hearing on the parties‘ 

outstanding motions for summary judgment, as well as on Homeowners‘ and Bank‘s 

 

9 Thus, Homeowners filed two separate motions for partial summary judgment. The first sought 

dismissal of Bank‘s counterclaims for slander of title and abuse of process. The second sought a summary 

judgment nullifying all actions taken by ASC HOA‘s board.
10

competing claims for declaratory relief.

10 At the conclusion of the first day, the trial court 

declined to rule on the motions, and continued the matter to hear additional testimony and 

evidence over the course of three more days regarding Homeowners‘ and Banks‘ 

competing claims for declaratory relief and damages.

11

Thereafter, while the matters were under submission, Bank filed a motion for 

reimbursement of funds it had provided to ASC HOA for upkeep and maintenance of the 

Subdivision‘s common grounds. In its motion, Bank asked the court to order 

Homeowners to pay their pro rata portion of these costs. On November 20, 2012, the trial 

court conducted a hearing on the motion. The court then entered an interlocutory order 

granting Bank‘s motion and ordering Homeowners to separately reimburse Bank their 

pro rata share of expenses that Bank paid on behalf of ASC HOA. 

On December 20, 2012, the trial court entered ―Findings of Fact and Conclusions 

of Law on Plaintiff‘s Request for a Permanent Injunction.‖ The court found that Bank 

had properly amended the Declaration to remove the residency requirement, and, 

therefore, its executives were qualified to serve as members of the ASC HOA board. The 

court further found that the board properly approved McKelvey‘s plans for construction 

of the Lot 13 Home, and these plans did not violate the Declaration‘s architectural 

covenants. Based on these findings, the court denied Homeowners‘ request for permanent 

injunction, and summarily found ―all issues in favor of Defendants.‖ 

 

10 At the outset of the first day of hearings, Homeowners‘ counsel explained: ―[a]s a matter of 

orientation, we‘re here not only on the motions for summary judgment, and there are three of them in the 

file, but we‘re also here on an evidentiary hearing that relates to the equitable issues in the case.‖

11 Homeowners‘ counsel stated, and the court agreed, ―that the purpose of this hearing is to clean 

up all the equitable issues before the jury trial at the request of the Defendants.‖ As the evidentiary hearing 

continued into the second day, counsel for both parties sought clarification from the court with respect to 

the status of their competing motions for summary judgment. The court indicated: ―why don‘t we just do 

this. Since we are here and we have the time to do it, why don‘t we just – you know, each person can put on 

that evidence that you think you need to put on in order to make your points.‖ 
11

The parties to this appeal then filed separate motions seeking clarification with 

respect to the trial court‘s findings. In response, the court entered an order entitled ―Final 

Judgment.‖ The court clarified that of the three outstanding motions for summary 

judgment, the court granted Homeowners‘ motion for partial summary judgment in favor 

of Homeowners on Bank‘s counterclaims for slander of title and abuse of process. The

court denied ―all other pending [summary judgment] motions as moot.‖ With respect to 

Homeowners‘ fourth amended petition, the court entered ―final judgment . . . in favor of 

Defendants . . . on all counts asserted [by Homeowners],‖ as well as declaratory judgment 

in favor of Bank. The court stated, with respect to Bank‘s claim for reimbursement of 

maintenance expenses: ―consistent with this Court‘s interlocutory Order of November 20, 

2012, a monetary Final Judgment is entered in favor of [Bank] and against 

[Homeowners].‖ Next, the court ordered Homeowners to release the lis pendens 

previously filed with the St. Louis County Recorder of Deeds.

12 The court added: ―this 

final Judgment is meant to conclude all matters before this Court.‖ Homeowners, and 

Bank and McKelvey timely filed this consolidated appeal.

III. STANDARD OF REVIEW

Our review of the court‘s grant of summary judgment is de novo. ITT Comm. Fin. 

Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993). ―[W]e

review the record in the light most favorable to the non movant.‖ Loeffler v. City of 

O‘Fallon, 71 S.W.3d 638, 639 (Mo. App. E.D. 2002). We afford the non-movant the 

benefit of all reasonable inferences that can be drawn from the record. ITT, 854 S.W.2d 

 

12 Homeowners sought a writ of prohibition to vacate that portion of the January 22, 2013 

judgment ordering them to release the lis pendens. In State ex rel. Lemley v. Hon. Gloria C. Reno, No. ED 

99612, 2013 WL 1209615, at *2-3 (Mo. App. E.D. Mar. 26, 2013), this Court ruled that Homeowners are 

entitled to retain their lis pendens during the pendency of this appeal.
12

at 376. ―The key to summary judgment is the undisputed right to judgment as a matter of 

law,‖ not simply the absence of a dispute over genuine issues of material fact. Extended 

Stay Inc. v. American Auto. Ins. Co., 375 S.W.3d 834, 841 (Mo. App. E.D. 2012). 

We review the trial court‘s denial of Homeowners‘ petition for declaratory 

judgment and injunctive relief, as well as its grant of declaratory judgment to Bank, under 

the standard set forth in Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). Opponents 

of Prison Site, Inc. v. Carnahan, 994 S.W.2d 573, 577 (Mo. App. W.D. 1999); Blue Pool 

Farms, L.L.C. v. Basler, 239 S.W.3d 687, 690 (Mo. App. E.D. 2007). We will ―sustain 

the judgment of the trial court unless there is no substantial evidence to support it, unless 

it is against the weight of the evidence, or unless it erroneously declares or applies the 

law.‖ Blue Pool Farms, 239 S.W.3d at 690. ―We view the evidence and permissible 

inferences therefrom in the light most favorable to the judgment and disregard all 

contrary evidence and inferences.‖ Board of Educ. of St. Louis v. State, 229 S.W.3d 157, 

161 (Mo. App. E.D. 2007). We review questions of law, including the court‘s 

interpretation of the language of the Declaration, de novo. Blue Pool Farms, 239 S.W.3d 

at 690. 

IV. DISCUSSION

A. HOMEOWNERS’ POINTS ON APPEAL

1. Authority of ASC HOA to Govern the Subdivision

In their first point, Homeowners contend that the trial court erred as a matter of 

law by finding that Bank‘s newly-formed neighborhood association (ASC HOA) has 

authority to govern the Subdivision.

13 Homeowners argue that ASC HOA has no such 

 

13 No party contends that there remain genuine issues of material fact. Rather, the parties disagree 

on how to apply the law to the undisputed facts.
13

authority, because it is not the original Arbors Association designated in the Declaration,

and Missouri case law requires that a successor association receive an assignment of 

rights from the original association, which did not occur here.

Both Bank and McKelvey respond that the language of the Declaration permits 

ASC HOA to govern without an assignment from Arbors Association; however, they 

offer different rationales. Bank argues ASC HOA may govern because Bank received an 

assignment of rights from Developer, which entitled it to create ASC HOA. McKelvey 

argues ASC HOA has authority to govern because the amended Declaration designates 

ASC HOA as the neighborhood association. 

a. The Declaration Grants ASC HOA the Authority to Govern the Subdivision

As McKelvey contends, ASC HOA has the authority to govern the Subdivision. 

Specifically, the plain language of the Declaration permits Bank, as owner of 72% of the 

Subdivision‘s lots, to amend the Declaration to replace Arbors Association with another 

neighborhood association that serves the same role.

Generally, a subdivision‘s declaration establishes the extent of a neighborhood 

association‘s authority to enforce its covenants and restrictions, including whether the 

association may transfer such authority to another person.

14 See DeBaliviere Place Ass‘n 

v. Veal, 337 S.W.3d 670, 677 (Mo. banc 2011) (examining first ―whether the declaration 

 

14 A subdivision‘s declaration is a restrictive covenant that ―runs with the land,‖ which means it is 

binding on Developer, Homeowners, and Bank, as well as their successors in interest to the lots. See

McLaughlin v. Neiger, 286 S.W.2d 380, 383 (Mo. App. 1956) (―All covenants which relate to land and are 

for its benefit run with it, and may be enforced by each successive assignee into whose hands it may run by 

conveyance or assignment.‖); Marshall v. Pyramid Dev. Corp., 855 S.W.2d 403, 406 (Mo. App. W.D. 

1993) (―The Declaration regulates the relationship of the real estate developer to its subdivision, as well as 

the purchasers of property.‖); see also Wheelock v. Gibson, 744 S.W.2d 464, 466-467 (Mo. App. W.D. 

1987) (noting real covenants run with the land, and personal covenants, when recorded, provide 

constructive notice to successors in interest, thereby binding them as well.). It is governed by the same 

rules of construction applicable to any covenant or contract. See Kling v. Taylor-Morley, Inc., 929 S.W.2d 

816, 819 (Mo. App. E.D. 1996).
14

specifies any particular procedure for assigning rights or liabilities‖ to a successor 

association); Sherwood Estates Homes Ass‘n v. Schmidt, 592 S.W.2d 244, 247 

(interpreting language of declaration to determine whether association has authority to 

govern based on assignment from the developer); Pioneer Point Homeowners Ass‘n v. 

Booth, 179 S.W.3d 397, 402 (Mo. App. S.D. 2005) (holding declaration permitted 

assignments of authority from original neighborhood association to successor). ―When 

interpreting the declaration—which is simply a contract—it is necessary to ascertain the 

intent of the parties and give effect to that intention.‖ DeBaliviere Place, 337 S.W.3d at

676-677. ―In an unambiguous contract, the intent of the parties is to be discerned from 

the contract alone.‖ Id. at 677. We look to the plain, ordinary, and usual meaning of the 

words found in the declaration, and consider the document as a whole. See Kohner Props., 

Inc. v. SPCP Grp. VI, 408 S.W.3d 336, 342 (Mo. App. E.D. 2013) (applying rules of 

contract construction). We construe each term to avoid rendering other terms meaningless. 

Id. at 342-343. Only where the meaning is in doubt is it proper to consider the intentions 

of the parties by inquiring into the purpose sought to be accomplished and the 

accompanying circumstances at the time of the restrictive covenant. Kling, 929 S.W.2d at 

820. 

Here, the plain language of the Declaration is unambiguous. The Declaration 

expressly allows that it may be amended ―by vote or agreement of the Owners of Lots to 

which sixty-seven percent (67%) of the votes in the Association are allocated.‖ Bank, a 

mortgagee ―who acquired title pursuant to foreclosure or deed in lieu of foreclosure,‖ is 

expressly included within the Declaration‘s definition of lot owners who may vote to 

amend the Declaration. Additionally, the Declaration expressly states that lot owners may 
15

―modify‖ or ―eliminate‖ the Subdivision‘s governing neighborhood association, provided 

an ―adequate substitution is made.‖

15 (emphasis added). Thus, the plain language of the 

Declaration permitted Bank to cast its thirteen of the total eighteen lot-ownership votes

(72%) to amend the Declaration to replace Arbors Association with ASC HOA as the 

valid governing association for the Subdivision.

16

b. Homeowners’ and Bank’s Arguments are Unpersuasive

Homeowners contend that ASC HOA has no authority to govern, because it is not 

the original neighborhood association designated by the Declaration. This argument lacks 

merit. Again, the plain and unambiguous language of the original Declaration defined the 

governing neighborhood association as ―The Arbors at Sugar Creek Homeowners‘ 

Association . . . and its successors and assigns.‖ The phrase ―successors and assigns‖ is 

express evidence that the Declaration allowed for the possibility that another entity would 

succeed the original Arbors Association. See Pioneer Point, 179 S.W.3d 397, 402 (Mo. 

App. S.D. 2005) (ruling ―successors and assigns‖ is express evidence that declaration 

permits another entity to succeed original neighborhood association). Thus, the 

Declaration does not prevent ASC HOA from assuming governance of the Subdivision as 

a successor neighborhood association. 

 

15 Homeowners do not argue, and we do not find, that the amendment replacing Arbors 

Association with ASC HOA did not provide ―adequate substitution‖ because they serve the same role.

16 Homeowners reply that Bank‘s amendment was not valid because only one lot owner, Bank, 

voted to amend the Declaration. But this contention ignores the plain language of the Declaration. Here, the 

Declaration permits amendments: ―only by vote or agreement of the Owners of Lots to which sixty-seven 

percent (67%) of the votes in the Association are allocated.‖ (emphasis added). ―Allocated Interests‖ is 

defined as follows: ―[e]ach Owner‘s vote in the Association for all purposes shall be allocated on an equal 

basis, i.e., the Owner of each Lot having one vote.‖ (emphasis added). Thus, the Declaration affords Bank a 

vote for each of its thirteen lots, and Bank is not limited to casting a single vote as a lot owner, as 

Homeowners contend. Instead, Bank validly transferred Arbors Association‘s authority to ASC HOA by 

amending the Declaration when it cast all thirteen of its lot-ownership votes to substitute ASC HOA for 

Arbors Association.
16

In the alternative, Homeowners argue that ASC HOA may govern the Subdivision 

only if it received an assignment of rights from Arbors Association. In support of its 

argument, Homeowners cite DeBaliviere, 337 S.W.3d 670, and Valley View Village 

South Improvement Ass‘n v. Brock, 272 S.W.3d 927 (Mo. App. S.D. 2009). We find 

these cases to be unpersuasive.

First, DeBaliviere and Valley View are distinguishable on the facts. Both cases

concerned an assignment of rights between two neighborhood associations and not, as is 

the case here, between Developer and its purported successor developer who then created 

a successor neighborhood association. See DeBaliviere, 337 S.W.3d at 672-673 (holding

dissolved neighborhood association can transfer rights to another association as part of 

statutory winding-up process of corporate entity); Valley View, 272 S.W.3d at 930-931

(holding new neighborhood association had no authority to govern absent assignment of 

right or other ―legal obligation agreed to‖ by predecessor association). Second, neither 

case stands for the proposition that an assignment between neighborhood associations is 

necessarily required for a successor neighborhood association to assume governance of a 

subdivision. To the contrary, both cases recognize that a contractual agreement, such as 

the instant Declaration, may lawfully dictate how a successor association assumes 

authority. See DeBaliviere, 337 S.W.3d at 673 (looking beyond language of declaration 

only because it failed ―to specify any particular procedure for assigning rights or 

liabilities‖); Valley View, 272 S.W.3d at 931 (concluding a legal agreement to recognize 

successor association is required). 

Lastly, Bank mistakenly argues that it received the power to install ASC HOA as 

the governing body of the Subdivision through Developer‘s assignment of rights. But the
17

Declaration makes no mention, express or otherwise, of Developer‘s right to form 

additional or successor associations, or to transfer such a right to others.17 Rather, it

merely provides that Developer must form the first neighborhood association ―not later 

than the first conveyance of title to a Lot.‖ 18 We cannot look beyond this limited 

provision to assign Bank a right that the parties did not agree upon. See Valley View, 272 

S.W.3d at 931.

c. Point I Conclusion

For the foregoing reasons, we hold that the plain language of the amended 

Declaration supports the conclusion that ASC HOA is the valid governing neighborhood 

association for the Subdivision. Accordingly, we find no error in the trial court‘s ruling 

on partial summary judgment that ASC HOA is ―duly authorized‖ to govern the

Subdivision. Point denied.

2. Homeowners’ Petition for Declaratory and Injunctive Relief (Count I) 

Regarding the Validity of ASC HOA’s Board of Directors

In their second point, Homeowners contend the trial court erred by denying their 

Count I claim for declaratory and injunctive relief, after finding Bank‘s executives may

lawfully serve as board members on the neighborhood association‘s board of directors. 

 

17 The Declaration does list a number of rights that Developer, ―as Declarant,‖ may ―transfer, 

assign, or convey.‖ For instance, the Declaration provides that the Declarant may transfer the right to: (1) 

complete improvements, (2) exercise development rights on the Subdivision lots, (3) erect advertising signs, 

(4) maintain unit models, (5) locate construction trailers in the Subdivision, (6) ―appoint or remove any 

member of the Board during the Period of Declarant Control as set forth in Section 3.5.‖ As the Declaration 

was otherwise very specific regarding transferable rights, we must presume that the omission of the right to 

form a successor neighborhood association was intentional. See Heartland Presbytery v. Gashland 

Presbyterian Church, 364 S.W.3d 575, 586 (Mo. App. W.D. 2012) (applying rule of expressio unius est 

exclusio alterius or ―the expression of one thing is the exclusion of another‖ when interpreting contractual 

language); see also Scott v. Ranch-Roy-L, Inc., 182 S.W.3d 627, 633 (Mo. App. E.D. 2005) (limiting 

ability of the developer of a platted subdivision to assign its rights because a developer‘s rights are 

generally personal rights that do not run with the land). 

18 Homeowners admitted in circuit court that the Declaration provided Developer with this 

authority.
18

Specifically, Homeowners argue, inter alia, that the original Declaration required board 

members to be residents of the Subdivision, Bank‘s executives were not residents of the 

Subdivision, and Bank violated the Subdivision‘s implied covenant of good faith and fair 

dealing when it amended the original Declaration by removing the board member 

residency requirements. In support, Homeowners cite Rocky Ridge Ranch Property

Owners Ass‘n v. Areaco Investment Co., 993 S.W.2d 553 (Mo. App. E.D. 1999). Bank 

and McKelvey respond that Rocky Ridge is distinguishable, and that Bank properly

followed the Declaration‘s procedures in appointing its executives to ASC HOA‘s board 

of directors. We agree with Homeowners.

In an action for declaratory judgment, the trial court has the authority to ―declare 

rights, status, and other legal relations whether or not further relief is or could be 

claimed . . . [t]he declaration may be either affirmative or negative in form and effect; 

and such declarations shall have the force and effect of a final judgment or decree.‖

Section 527.0101, R.S.Mo. (2000). Although Homeowners have not included a separate 

count alleging that Bank violated the covenant of good faith and fair dealing, this legal 

theory supports Homeowners‘ action for declaratory judgment and injunctive relief. See

Polk Cnty. Bank v. Spitz, 690 S.W.2d 192, 194 (Mo. App. S.D. 1985) (recognizing a 

petition seeking declaratory relief may be based on a legal theory, regardless of whether a 

separate count seeking damages is included based on the same legal theory); City of 

Creve Coeur v. Creve Coeur Fire Prot. Dist., 355 S.W.2d 857, 859 (Mo. 1962). 

a. Bank Violated the Covenant of Good Faith and Fair Dealing

As Homeowners contend, we find as a matter of law that Bank violated the 

Declaration‘s implied covenant of good faith and fair dealing by amending the 
19

Declaration and removing the board member residency requirements. Bank then 

unilaterally appointed its own non-resident executives to the board, thereby 

circumventing the Declaration‘s requirement that ASC HOA‘s board of directors be 

composed of subdivision residents. 

The covenant of good faith and fair dealing is breached if Bank‘s actions violate 

the spirit of the Declaration and deny the other lot owners an expected benefit of the 

Declaration. See Glenn v. HealthLink HMO, Inc., 360 S.W.3d 866, 879 (Mo. App. E.D. 

2012). ―Good faith is an  ̳obligation imposed by law to prevent opportunistic behavior, 

that is, the exploitation of changing economic conditions to ensure gains in excess of 

those reasonably expected at the time of contracting.‘‖ Frontenac Bank v. T.R. Hughes, 

Inc., 404 S.W.3d 272, 280 (Mo. App. E.D. 2012) (quoting Schell v. LifeMark Hosps. Of 

Mo., 92 S.W.3d 222, 230 (Mo. App. W.D. 2002)).

To prove violation of the covenant of good-faith and fair dealing, Homeowners

must present ―substantial evidence‖ that Bank ―acted in bad faith, or engaged in unfair 

dealing.‖ Acetylene Gas Co. v. Oliver, 939 S.W.2d 404, 410 (Mo. App. E.D. 1996). ―Bad 

faith may be overt or may consist of inaction, and fair dealing may require more than 

honesty.‖ Restatement (Second) of Contracts § 205 (1981). Examples of bad faith actions 

recognized in Missouri include: (1) ―utiliz[ing] contract language that allow[s] unilateral 

action to improperly deny the other party from expected benefits flowing from the 

contract,‖ Koger v. Hartford Life Ins. Co., 28 S.W.3d 405, 412 (Mo. App. W.D. 2000) 

(citing Martin v. Prier Brass Mfg. Co., 710 S.W.2d 466, 473 (Mo. App. W.D. 1986) 

(exercising judgment ―conferred by the express terms of agreement in such a manner as 

to evade the spirit of the transaction or so as to deny the other party the expected benefit 
20

of the contract,‖ violates the duty of good faith)); and (2) effectuating an amendment to a 

subdivision‘s declaration through a ―devious attempt to circumvent‖ the intent reflected 

in that agreement, Rocky Ridge, 993 S.W.2d at 556.

Homeowners argue that the facts in Rocky Ridge, 993 S.W.2d at 556, are 

comparable to the instant case. In Rocky Ridge, the subdivision‘s indenture provided that 

it could be amended by a vote of two-thirds of the lot owners. 993 S.W.2d at 556. After 

the Rocky Ridge developer sold approximately half of the originally platted lots to 

homeowners, it platted numerous additional unsellable lots to itself, to ensure that it 

retained enough votes to unilaterally amend the declaration. Id. at 555. The developer 

then exercised its newly created voting power to adopt an amendment to the detriment of 

the other homeowners. Id. On appeal, this Court held that the developer‘s ―procedure to 

amend the [original indenture] was nothing more than a poorly concocted voting sham,‖ 

and that the developer breached its covenant of good faith and fair dealing by adopting

the amendment. Id. at 556. 

We agree that Bank‘s actions here are comparable to those in Rocky Ridge. The 

original Declaration provided Homeowners the significant benefit of self-governance of 

the Subdivision by establishing that only residents could hold office on the neighborhood 

association‘s board of directors. At its outset, the Declaration establishes: 

―it is the purpose and intention of this Declaration to create . . . a residential 

community . . . and to preserve the Property . . . and to protect the same against 

certain uses by the adoption of this Declaration, and to apply the general plan of 

development . . . [for] all [eighteen lots] . . . for the mutual benefit of the 

Declarant and all persons who may purchase, hold or own . . . the [lots].‖ 

(emphasis added). It continues: ―[t]he success of the Community is dependent upon the 

support and participation of every Owner in its governance and administration . . . [and] 
21

the Association [is] the mechanism by which each Owner is able to provide . . . support 

and participation.‖ (emphasis added). The Declaration ensured this participatory 

governance by specifying that the board of directors would consist entirely of residents of 

the Subdivision after the self-described ―Period of Declarant Control‖ expired. When 

Homeowners purchased their homes and Bank subordinated its deeds of trust to the 

Declaration, all parties held a reasonable expectation that the neighborhood association 

would ultimately be governed by a board composed solely of the Subdivision‘s residents.

Yet, after Homeowners had already purchased and built their homes, Bank 

foreclosed upon the remaining lots in the Subdivision. As a consequence of this 

foreclosure, under the plain terms of the Declaration, Bank acquired majority voting 

power among the lot owners. Then, over Homeowners‘ objections, Bank exercised its 

newfound control to remove the residency requirement for board membership, as well as 

the requirement that ASC HOA‘s board be composed of directors ―other than Declarant.‖

Finally, Bank exploited its change to the Declaration to stock ASC HOA‘s board of 

directors with its own non-resident executives, who then rubber-stamped Bank‘s plan to 

develop the Subdivision with McKelvey.

Though it is correct, as Bank argues, that the Declaration provides it can be 

amended by the vote of 67% of lot owners, we do not believe that the original parties to 

the Declaration intended that a lot owner could unilaterally circumvent the requirement 

that those who actually reside in the Subdivision govern the Subdivision‘s affairs. Nor do 

we believe that Homeowners could reasonably have foreseen the instant turn of events.

Rather, Bank relied on its acquisition of majority voting power to unilaterally 

deny Homeowners the benefit of self-governance that they received under the original 
22

Declaration. See Klonoski v. Cardiovascular Consultants of Cape Girardeau, Inc., 171 

S.W.3d at 74 (―When a party, in bad faith, utilizes contract language that allows 

unilateral action to improperly deny the other party . . . expected benefits flowing from 

the contract, he breaches this covenant.‖ (citing Koger, 28 S.W.3d at 412)). 

At trial, Bank‘s president testified ―our interests are different‖ than those of the 

Homeowners, and he acknowledged Bank‘s interests were ―short term.‖ He admitted that 

Bank understood it needed to control the board in order to approve the development plans 

it had already entered into with McKelvey. Later, he explained: ―[t]he market has 

spoken . . . the market spoke that it wanted a different kind of home [in the Subdivision].‖

By amending the Declaration to appoint its own non-resident executives as 

directors of ASC HOA‘s board, Bank seized upon ―the express terms of agreement in 

such a manner as to evade the spirit of the transaction,‖ Martin, 710 S.W.2d at 473,

which plainly contemplated that Homeowners would have the right to chart their own

course for the community in which they resided. Further, Bank used its command of the

Subdivision‘s affairs to advance its own financial interest in redeveloping the Subdivision 

in a manner contrary to the wishes of the newly disenfranchised residents. Thus, we find 

Bank violated the implied covenant of good faith and fair dealing by amending the 

Declaration and removing the residency requirement for ASC HOA‘s board members so 

that it could appoint its own executives to the board. See Glenn, 360 S.W.3d at 879 

(instructing that a party breaches covenant of good faith and fair dealing by violating 

spirit of agreement and denying other party expected benefit). 

b. Bank and McKelvey’s Response is Unpersuasive
23

Bank and McKelvey respond that the instant case is distinguishable from Rocky 

Ridge. Specifically, they argue that there was no violation of the implied covenant of 

good faith and fair dealing, because Bank, as the ―Declarant,‖ complied with the 

Declaration when it removed the residency requirements for directors and appointed its 

own executives by a vote of more than 67% of lot owners. Bank and McKelvey rely on a 

provision in the Declaration specifying that the Declarant, as well as its successors and 

assigns, have the authority to unilaterally appoint members to the homeowners‘

association‘s board of directors during the Period of Declarant Control, as defined by the 

Declaration.

19

 

This argument mistakenly presupposes that Bank is the ―Declarant,‖ as defined in

the Declaration. Here, Bank does not fit the Declaration‘s definition of ―Declarant.‖ The 

plain and unambiguous language of the Declaration defines ―Declarant‖ narrowly to 

include the original Developer, and ―its successors and assigns, if such successors or 

assigns should acquire more than one unimproved Lot from the Declarant for the purpose 

of constructing a Dwelling Unit thereon.‖ (emphasis added).

Bank took possession of Developer‘s thirteen remaining unsold lots through 

foreclosure proceedings, which are typically instituted for the purpose of collecting

payment on an underlying loan. See Howard v. Zweigart, 197 S.W. 46, 55 (Mo. banc 

1917) (recognizing the validity of a foreclosure where the sole purpose was to collect on 

a debt); see also White v. Simard, 152 Md.App. 229, 252 (2003) (―[T]he exclusive 

purpose of a foreclosure sale is to timely and efficiently recoup the balance remaining on 

 

19 Prior to Bank‘s amendment, the Declaration specifically provided: ―[e]xcept for Directors 

appointed by Declarant during the Period of Declarant Control . . . the Board shall consist of Owners other 

than the Declarant.‖ It further stated: ―[e]xcept for Directors appointed by Declarant . . . an Owner shall be 

a Member in Good Standing who is a resident of the Community.‖
24

the mortgage account.‖). Neither Bank nor McKelvey asserts that Bank acquired lots in 

the Subdivision ―for the purpose‖ of constructing houses. To the contrary, Bank‘s 

president testified that after foreclosure, it immediately began exploring options to sell 

the lots to various developers for the purposes of recouping its losses, not to construct 

homes.

20 As there is no evidence that Bank ―acquire[d] more than one unimproved Lot 

from the Declarant for the purpose of constructing a Dwelling Unit thereon,‖ we cannot 

conclude that Bank is the ―Declarant‖ with powers to unilaterally appoint directors to the

neighborhood association. 

In the alternative, Bank and McKelvey argue that Bank acted in good faith, 

because it explicitly followed the Declaration‘s procedures for adopting amendments

when it voted to remove residency requirements. Homeowners, however, do not claim 

that Bank failed to follow the Declaration‘s voting procedures. Rather, Homeowners 

argue that what Bank did with its votes—amending the declaration to remove the

residency requirement and packing the board with its own non-resident executives—

violated the spirit of the Declaration, and therefore violated the covenant of good faith 

and fair dealing. As we have explained, Homeowners are correct that this action breached 

the covenant of good faith and fair dealing by stripping the Declaration of a substantial 

benefit it originally bestowed upon Homeowners. See Rocky Ridge, 993 S.W.2d 553, 

556 (Mo. App. E.D. 1999).

c. Point II Conclusion

For the foregoing reasons, we find that Bank‘s amendment of the Declaration to 

remove the residency requirement violated the Declaration‘s implied covenant of good 

 

20 When asked how Bank wished to extricate itself from its ownership of the unsold lots, Bank‘s 

president testified: ―It‘s no secret the bank would like to dispose of its foreclosed asset, right,‖ as well as 

admitted, ―we would like to sell the lots.‖
25

faith and fair dealing. Therefore, the trial court erred by denying Homeowners‘ Fourth 

Amended Petition Count I seeking declaratory and injunctive relief by finding ASC 

HOA‘s board of directors may validly be composed of Bank‘s non-resident employees.

Furthermore, because the current board of directors of ASC HOA was wrongly 

comprised of non-resident Bank employees, all of the board‘s subsequent actions are null 

and void. See Rocky Ridge, 993 S.W.2d at 556 (holding ―product" of voting action that 

violated the covenant of good faith and fair dealing was invalid). We therefore reverse 

and remand Count I with instructions that the trial court enter a judgment declaring the 

rights and obligations of the parties and granting injunctive relief in a manner consistent 

with this opinion. Point granted.

3. Homeowners’ Points III – IV ASC HOA’s Approval of Development Plans

Homeowners contend in Points III and IV that the trial court erred in denying 

them injunctive relief and granting declaratory judgment in favor of Bank because: (1)

ASC HOA‘s board ―did not act reasonably or in good faith in approving McKelvey‘s

plans‖ for the Lot 13 Home; and (2) the designs of the Lot 13 Home, which the Board 

approved, and future homes planned by McKelvey violate the Declaration‘s architectural 

covenants.

As we have already explained above in Point II, Homeowners are entitled to 

injunctive and declaratory relief consistent with our finding that ASC HOA‘s board was 

and is improperly composed of Bank‘s employees, and that its subsequent actions are null 

and void. Consequently, the board‘s actions: (1) approving the Lot 13 Home and future 

homes and (2) its decisions regarding compliance with the Declaration‘s architectural 

covenants should be declared null and void. We do not decide Homeowners‘ claims 
26

concerning whether the Lot 13 Home, or Bank and McKelvey‘s future home designs

violate the Declaration‘s architectural covenants, because these issues must be revisited 

by a properly constituted ASC HOA board of directors. We therefore reverse and remand 

the issues presented in Homeowners‘ Points III and IV for further proceedings consistent 

with this opinion. Points III and IV are therefore granted to the extent we find the court 

erred in denying Homeowners request for declaratory and injunctive relief. 

4. Homeowners’ Point V – Maintenance Costs for Subdivision

In their fifth point, Homeowners contend the trial court erred in granting Bank‘s 

motion for reimbursement of maintenance costs it purportedly incurred on behalf of ASC 

HOA‘s board, because Bank failed to present any competent evidence of the costs or 

comply with the procedures of the Declaration when it incurred these costs. Again, 

because we find that the board‘s action approving such expenditures, ab initio, is null and 

void, we reverse the court‘s order requiring Homeowners to reimburse Bank for such 

expenditures. Whether to ratify any or all of the decisions of the former ASC HOA‘s 

improperly constituted board regarding maintenance expenses, and how such expenses 

might be divided among lot owners, is an issue that first should be addressed by a 

properly constituted board. The trial court must enter findings in a manner consistent with 

this opinion. We therefore reverse and remand Point V for further proceedings. Point 

granted, insofar as we agree the court erred in awarding Bank such costs.

4. Homeowners’ Point VI – Damages

In their sixth point, Homeowners contend that the court erred in granting 

judgment in favor of Bank and McKelvey on Homeowners‘ additional claims for 

damages caused by the actions of the improperly constituted ASC HOA. In addition to 
27

Homeowners‘ Count I, which sought declaratory and injunctive relief, Homeowners‘ 

petition included causes of action seeking damages under: Count II, alleging breach of 

fiduciary duty; Count III, alleging civil conspiracy; Count IV, alleging tortious 

interference; and Count V, alleging nuisance. Homeowners request that we reverse and 

order an evidentiary hearing with respect to these claims. Respondents argue there was no 

violation of the Declaration‘s covenants by Defendants, so the trial court did not err in 

dismissing Homeowners‘ remaining damages claims.

The trial court, in its December 20, 2012 ―Findings of Fact and Conclusions of 

Law on Plaintiff‘s Request for a Permanent Injunction‖ stated that Bank‘s non-resident 

employees may validly serve on ASC HOA‘s board of directors and denied

Homeowners‘ Count I for declaratory and injunctive relief, primarily on this ground. 

Because the December 20, 2012 Findings did not address Homeowners‘ remaining 

counts II through V, the parties requested clarification. In response, the court entered a 

―Final Judgment‖ on January 22, 2013, incorporating its earlier finding that ASC HOA‘s 

board was properly composed of Bank‘s non-resident employees, and decreeing that:

―consistent with the Court‘s Findings of Fact and Conclusions of Law of December 20, 

2012 . . . Final Judgment is entered in favor of Defendants . . . and against 

[Homeowners] . . . jointly and severally on all Counts . . .‖ It is evident that the trial court, 

in denying all of Homeowners‘ Counts I through V, based its Final Judgment on the 

erroneous conclusion that ASC HOA‘s board was validly composed of Bank‘s nonresident employees. Therefore, Counts II through V alleging damages must also be 

remanded to the trial court with instructions that it conduct further proceedings. The trial 

court is in the best position to determine Homeowners‘ claims for damages, and whether 
28

further proceedings are necessary. See Emery v. Wal-Mart Stores, Inc., 976 S.W.2d 439, 

448 (Mo. banc 1998) (recognizing issue of damages is generally for the finder of fact, 

who is in a superior position to evaluate allegations of harm). 

In conclusion, with respect to Homeowners‘ claims, we reverse the trial court‘s 

judgment regarding: Count II, alleging Bank‘s breach of fiduciary duty; Count III, 

alleging McKelvey and Bank‘s civil conspiracy; Count IV, alleging McKelvey and 

Bank‘s tortious interference; and Count V, alleging nuisance against McKelvey and Bank. 

We remand for further proceedings consistent with this opinion. Point granted.

B. BANK’S COUNTERCLAIMS

1. Slander of Title

In its first point on cross-appeal, Bank argues that the trial court erred by granting 

Homeowners‘ motion for summary judgment on Bank‘s counterclaim for slander of title, 

because there were disputed issues of material fact regarding whether Homeowners‘ 

filing of a notice of lis pendens was unauthorized by law. In response, Homeowners 

contend that this Court has already decided that the lis pendens is authorized as a matter 

of law and therefore, Bank cannot prove all of the essential elements of its slander of title 

claim. Homeowners are correct.

A ―defending party‖ may establish a right to summary judgment by showing as a 

matter of law that the plaintiff cannot establish an essential element of its claim. See ITT 

Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 381 (Mo.

banc 1993). Slander of title has three essential elements: (1) false words concerning title 

to property; (2) malice in the publication of such; and (3) injury to the party whose title 

was slandered. Tongay v. Franklin Cnty. Mercantile Bank, 735 S.W.2d 766, 770 (Mo. 
29

App. E.D. 1987). Only if the filing of a lis pendens is unauthorized by statute, does it

meet the ―false words‖ requirement for a slander of title action. First Nat‘l Bank of St. 

Louis v. Ricon, Inc., 311 S.W.3d 857, 865 (Mo. App. E.D. 2010). Additionally, to prove

the existence of malice, Bank‘s evidence must support a reasonable inference that 

Homeowners‘ lis pendens was, inter alia, filed ―without legal justification or excuse.‖ Id.

at 867. 

Here, Bank‘s claim for slander of title fails as a matter of law because in the writ 

of prohibition sought by Homeowners during the pendency of this appeal, this Court 

already determined that Homeowners‘ filing of the lis pendens was authorized by 

statute.

21 See State ex rel. Lemley v. Hon. Gloria C. Reno, No. ED 99612, 2013 WL 

1209615, at *2-3 (Mo. App. E.D. Mar. 26, 2013) (rejecting Bank‘s argument regarding 

unlawfulness of lis pendens when Bank raised issue in response to writ filed by 

Homeowners). Specifically, this Court held: 

Section 527.260 provides [Homeowners] the unqualified right to record a 

lis pendens  ̳[i]n any civil action, based on any equitable right, claim or 

lien, affecting or designed to affect real estate.‘ [Homeowners] action 

concerns the enforcement of certain covenants and restrictions that affect 

the owners‘ interest in the land. Accordingly, [Homeowners] properly 

exercised their rights under Section 527.260 when they initially recorded 

the lis pendens at issue.

Id. at *2 (citations omitted).

―Unless there is a change in the issues or the evidence, the court of appeals‘ 

previous holding constitutes the law of the case and concludes any issues decided.‖ 

Gamble v. Hoffman, 732 S.W.2d 890, 895 (Mo. banc 1987). ―The doctrine of the law of 

the case permits a decision on an issue of law made at one stage of a case to become 

 

21 Homeowners petitioned for a writ of prohibition, arguing that the trial court exceeded its 

authority when it ordered them to release their lis pendens during the pendency of this appeal. 
30

binding in successive stages of the same litigation.‖ Pathway Fin. v. Schade, 793 S.W.2d 

464, 469 (Mo. App. E.D. 1990). The doctrine of law of the case is not absolute, however, 

it applies as a rule of policy unless the first decision was based on a mistaken fact, 

resulted in manifest injustice, a change in the law intervened between the appeals, or 

where the issues or evidence on remand are substantially different from those vital to the 

first adjudication and judgment. Walton v. City of Berkeley, 223 S.W.3d 126, 130 (Mo. 

banc 2007).

Although Homeowners‘ writ of prohibition sought a decision on a peripheral 

issue, this Court determined, in this case, that as a matter of law Homeowners‘ 

recordation of the lis pendens was valid under section 527.260. Lemley, 2013 WL 

1209615, at *2-3. Because this Court's previous holding on this issue relied on the same 

evidence and arguments, yet our holding did not result from a mistaken fact, there has 

been no change in the law, and it did not result in a manifest injustice, we apply the 

doctrine of law of the case and find that Bank fails, as a matter of law, to establish the 

essential elements of ―false words‖ or ―malice‖ for its slander of title claim. See First 

Nat‘l Bank, 311 S.W.3d at 864 (―Parties have an absolute privilege to disparage another‘s 

property interest when participating in a judicial proceeding if the disparagement has 

some relation to the judicial proceeding.‖). Accordingly, the trial court did not err in

granting Homeowners‘ motion for summary judgment on Bank‘s counterclaim for 

slander of title. Point denied.

2. Abuse of Process 

In its second point on cross-appeal, Bank contends the trial court erred by 

granting Homeowners‘ motion for summary judgment on Bank‘s counterclaim for abuse 
31

of process, because there is a genuine issue of material fact regarding whether 

Homeowners filed the instant lawsuit to undermine Bank‘s ability to sell its properties in 

the Subdivision. Specifically, Bank contends that Homeowners instituted this action in 

order to cloud title to Bank‘s lots with a lis pendens, not to obtain the relief that they now 

seek on appeal. In response, Homeowners assert that Bank has produced no evidence to 

establish that they acted illegally or with improper motive. We agree with Homeowners. 

Again, a ―defending party‖ may establish a right to summary judgment by 

showing as a matter of law that the plaintiff cannot establish an essential element of its 

claim. See ITT Commercial Fin. Corp., 854 S.W.2d at 381. ―To sustain a claim for abuse 

of process there must be [1] an illegal and unauthorized use of process, [2] an ulterior 

motive for the use of such process, and [3] resulting damages.‖ Wessler v. Wessler, 610 

S.W.2d 650, 651 (Mo. App. E.D. 1980). The essence of an abuse of process claim is not 

the commencement of an action without justification, but rather the misuse of process to 

accomplish an unlawful end or ―compel the opposite party to do some collateral thing 

which he could not be compelled to do legally.‖ Duvall v. Lawrence, 86 S.W.3d 74, 85 

(Mo. App. E.D. 2002). Even if the defendant had a bad motive, a claim for abuse of 

process does not lie where the defendant‘s use of legal process was within her legal rights

or if she has ―done nothing more than pursue a lawsuit to its authorized conclusion.‖ 

Pipefitters Health & Welfare Trust v. Waldo R., Inc., 760 S.W.2d 196, 198 (Mo. App. 

E.D. 1988); Herring v. Behlmann, 734 S.W.2d 311, 313-314 (Mo. App. E.D. 1987). 

Here, Homeowners pursued the instant action to accomplish a lawful end. They 

sought injunctive relief and declaratory judgment on the grounds that Bank improperly 

amended the Declaration to remove the residency requirement, and elected its own non-
32

resident employees as officers, who then rubber-stamped approval of Bank and 

McKelvey‘s plans for redevelopment of the Subdivision. Moreover, this Court held that 

Homeowners‘ action in filing the lis pendens was entirely legitimate. Lemley, 2013 WL 

1209615, at *2-3 (holding homeowners‘ lis pendens was lawful). Accordingly, the trial 

court did not err in granting Homeowners‘ motion for summary judgment on Bank‘s 

counterclaim for abuse of process, because Bank failed as a matter of law to establish the 

essential ―illegal and unauthorized use of process‖ element for its abuse of process claim. 

Pipefitters Health & Welfare Trust, 760 S.W.2d at 198 (explaining abuse of process claim 

fails where defendant‘s action is within its legal rights); Wessler, 610 S.W.2d at 651 

(explaining plaintiff must establish element of ―an illegal and unauthorized use of 

process‖ in abuse of process claim). Point denied.

V. CONCLUSION

We affirm the trial court‘s grant of Homeowners‘ motions for summary judgment 

on Bank‘s counterclaims of slander of title and abuse of process. We also affirm the trial 

court‘s grant of partial summary judgment in favor of Bank on Bank‘s claim that ASC 

HOA has the authority to govern the Subdivision. However, we reverse the trial court‘s 

judgment with respect to Count I denying Homeowners‘ claims for declaratory and 

injunctive relief, and granting Bank declaratory relief, on Homeowners‘ claim that ASC 

HOA‘s board was improperly composed of Bank‘s non-resident employees. We hold that 

Bank violated the Declaration‘s implied covenant of good faith and fair dealing by 

amending the Declaration to eliminate the residency requirement and then electing its 

non-resident executives to the board. We reverse and remand to the trial court 

Homeowners‘ Count I with instructions that it enter declaratory judgment in favor of 
33

Homeowners, and grant their request for appropriate permanent injunctive relief in a 

manner consistent with this opinion. Homeowners‘ remaining claims for damages in 

Counts II, III, IV and V of their Fourth Amended Petition are also remanded for further 

proceedings consistent with this opinion.

_________________________________

Lisa S. Van Amburg, Presiding Judge

Patricia L. Cohen, J. concurs and 

Gary M. Gaertner, Jr., J. dissents in a separate opinion.