Court Opinion

ID: 4025100
Source: CourtListenerOpinion
Date Created: 2016-08-15 22:23:11.275246+00
Date Added: 2024-06-11T14:30:17.419546
License: Public Domain

IN THE SUPREME COURT, STATE OF WYOMING

                                    2016 WY 67

                                                    APRIL TERM, A.D. 2016

                                                            June 30, 2016

FELIX FELICIS, LLC, a Wyoming
limited liability company, and CAROL
BAKER and MARK STEIN,

Appellants
(Plaintiffs),

v.                                              S-15-0236

RIVA RIDGE OWNERS
ASSOCIATION, CODY MUELLER,
JOHN CAMPBELL, and JEFF HUSSEY,

Appellees
(Defendants).

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

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

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

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

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

KAUTZ, J., delivers the opinion of the Court; FORGEY, D.J., delivers an opinion
concurring in part and dissenting in part.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made
before final publication in the permanent volume.
KAUTZ, Justice.

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

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

                                         ISSUES

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

                    1) In seeking to interpret an ambiguous restrictive
             covenant, did the [d]istrict [c]ourt err when it disregarded the
             intent of the drafter in its legal analysis and adopted the
             Restatement (Third) of Property: Servitudes § 4.1, which the
             [d]istrict court read to allow the court to focus on the intent of
             the collective property owners within the Riva Ridge
             subdivision rather than the intent of the drafters?

                   2) Did the [d]istrict [c]ourt err when it granted
             summary judgment to the homeowners’ association on [the
             Baker-Steins’] claim for damages?

                    3) Did the [d]istrict [c]ourt err when it granted
             summary judgment to the homeowners’ association on the
             issue of whether landscaping could be used as a visibility
             screen only if approved by the homeowners’ association?

                                             1
                                          FACTS

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

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

              Section 4. Site Design.

                     (a) Building Envelope. In order to provide for the
              maximum privacy and in order to maintain views from
              the principal residences on each of the Tracts without
              buildings or other structures in the foreground, building
              envelopes are hereby established for each of the Tracts. Each
              of the Tracts comprising the Property contains a principal
              residence building site which has been approved by Teton
              County as being in conformance with the skylining and scenic
              resource overlay regulations of Teton County. These building
              sites have not been approved by Teton County for actual
              construction, however, each building site has been examined
              and an environmental assessment prepared and submitted to
              Teton County and the recommendations set forth in the
              environmental assessment must be followed in gaining
              specific approval of a building site from Teton County. The

                                              2
             designated building sites for each of the individual Tracts
             comprising the Property are as described on Exhibit “H”
             attached hereto and by this reference made a part hereof.
             Building envelopes for each of the Tracts, with the exception
             of Tract G, shall consist of a contiguous four-acre parcel of
             any shape or configuration determined by the Owner of each
             of the Tracts and which building envelope shall contain
             within it the designated building site. The building envelope
             for Tract G shall consist of a contiguous ten (10) acre parcel
             of any shape or configuration determined by the Owner of the
             Tract and which building envelope shall contain within it the
             designated building site. In configuring the building envelope
             for each Tract, the designated building site shall not be
             relocated without the approval of the Site Committee after
             compliance with all of the requirements set forth hereinafter
             for relocation of building envelopes. . . . The location of
             building envelopes shall be submitted with the site plan upon
             submission of building plans for approval for construction.
             No structure may be so constructed or placed within a
             building envelope so that it is visible from any principal
             residence site as designated on Exhibit “H”, or from any
             principal residence site relocated pursuant to the provisions
             of these Covenants, Conditions and Restrictions.

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

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

                    (1) No portion of a house or principal residence
             constructed at the approved relocated principal residence site
             shall be visible from any designated principal residence site
             on any other Tract of the Property.

                    (2) The building envelope shall be so located
             surrounding the relocated principal residence site such that no
             structures constructed or to be constructed within the building
             envelope shall be visible from the designated principal
             residence site of any other Tract.

                                           3
                      (3) The Site Committee may, as a condition of
              approval of relocation, impose additional restrictions on
              structures within a relocated building envelope or designated
              site, such as, but not necessarily limited to, size limitations
              and height restrictions, and such additional conditions or
              restrictions shall have the force and effect of all initial
              provisions of these covenants.

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

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

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

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

[¶9] After the covenants were recorded, the Declarant began selling the tracts in Riva
Ridge. Homer Luther purchased Tract A in July of 1998 and thereafter built a home on
the property. Karla Tessler purchased Tract E and, according to Mr. Luther, in January
1
  A story pole is defined as: “a pole cut to the proposed clear height between finished floor and
ceiling and often marked with minor dimensions (as for door trims and dadoes) that is used
especially by carpenters and bricklayers.” Webster’s Third New Int’l Unabridged Dictionary
(2002).

                                               4
of 2000 requested permission from the Association to relocate the principal residence site
for that tract. According to Mr. Luther, the Association approved that request and at
some point in time Ms. Tessler built a home on Tract E. The house is not built on or near
the original principal residence site shown as the “homesite” on Exhibit H of the
covenants. Cody Mueller purchased Tract E from Ms. Tessler in 2007, and Susan and
John Jackson purchased Tract A from Mr. Luther in 2011.

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

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

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

                                              5
[¶13] Each party filed a motion for partial summary judgment. Of significance to this
appeal, the district court determined that the phrase “principal residence site” in the
covenants was ambiguous and, thus, a question of fact existed regarding the intent of the
drafter and the meaning of the visibility restriction. The district court concluded that,
with respect to landscaping, the covenants as a whole were unambiguous and required
that property owners seek permission from the Site Committee before doing any
landscaping, including planting trees. Finally, the district court granted summary
judgment in favor of the Appellees on the breach of contract claim, finding that the
Baker-Steins had failed to show a provision in the covenants that would allow them to
recover damages from the Appellees.

[¶14] Thereafter, the district court held a bench trial to determine the meaning of
“principal residence site.” The court received testimony from many witnesses, including
Mr. Larson, Mr. O’Malley, Mr. Stein, Mr. Mueller, Mr. Campbell, and the Jacksons. The
court also heard the testimony of the architect who designed the Baker-Steins’ home, an
architect who was assisting the Site Committee, and the parties submitted the deposition
testimony of Mr. Luther.2 After considering all of the evidence, the district court
determined that the residents of Riva Ridge believe the covenants require complete
invisibility between the homes, and because the residents bought their homes with that
expectation, that perceived benefit should be protected. Although the court had
determined on summary judgment that landscaping required Site Committee approval, it
reaffirmed its decision in that respect in the order following the bench trial. The Baker-
Steins timely filed a notice of appeal.

                                              DISCUSSION

Meaning of “Principal Residence Site”

[¶15] The Baker-Steins argue the district court improperly concluded that the covenants
require all homes in Riva Ridge be invisible from one another. Specifically, the Baker-
Steins submit that when interpreting the ambiguous phrase “principal residence site,” the
district court improperly gave more consideration to the current homeowners’ belief of
what the covenants mean than to the testimony of Mr. Larson, who actually wrote the
covenants.3

2
 While the district court relied upon Mr. Luther’s deposition in its order, and the parties, particularly the
Appellees, refer to it in their briefs, neither party designated the deposition as part of the record on appeal.
The documents that disclosed which portions of the deposition the parties wanted the district court to
consider are in the record on appeal, but without the actual deposition this Court cannot consider the
substance of the deposition.
3
  In addition to “principal residence site,” the covenants refer to “building site,” “designated building
site,” and “principal residence building site.” However, it is clear from the entirety of the covenants that
                                                       6
[¶16] When reviewing a bench trial, this Court reviews the trial court’s findings of fact
for clear error and its conclusions of law de novo. Moore v. Wolititch, 2015 WY 11, ¶ 9,
341 P.3d 421, 423 (Wyo. 2015). Covenants are contractual in nature and will be
interpreted in accordance with contract law principles. Stevens v. Elk Run Homeowners’
Ass’n, 2004 WY 63, ¶ 12, 90 P.3d 1162, 1165-66 (Wyo. 2004). The construction and
interpretation of a contract is a matter of law and, thus, will be reviewed de novo. Id., ¶
12, 90 P.3d at 1166. Here, the district court determined at the summary judgment stage
that the phrase “principal residence site” was ambiguous, requiring the resolution of a
factual issue at trial.4 Neither party claims that conclusion was erroneous. However,
“[r]eviewing courts are free to make a determination as to the existence of ambiguity
whether or not the parties agree one way or the other and whether or not the trial court
has reached a conclusion one way or the other.” Cathcart v. State Farm Mut. Auto Ins.
Co., 2005 WY 154, ¶ 18, 123 P.3d 579, 588 (Wyo. 2005). This Court reviews de novo
the question of whether language in the covenants is ambiguous. Hutchison v. Hill, 3
P.3d 242, 245 (Wyo. 2000).

[¶17] At the outset, it is important to address a stance the Appellees have taken in the
district court and on appeal. They argue that the courts should not interfere with the Site
Committee’s interpretation of the covenants unless that interpretation is unreasonable. In
support of that proposition, they cite McHuron v. Grand Teton Lodge Co., 899 P.2d 38
(Wyo. 1995); Hammons v. Table Mt. Ranches Owners Ass’n, Inc., 2003 WY 85, 72 P.3d
1153 (Wyo. 2003); and Dwan v. Indian Springs Ranch Homeowners Ass’n, Inc., 2008
WY 74, 186 P.3d 1199 (Wyo. 2008). In each of those cases, we discussed whether the
respective homeowners associations acted reasonably in denying the homeowners’
building requests. However, in each case there was never a question about the meaning
of the covenants; instead, the question was whether the associations reasonably applied
them. If we utilized a reasonableness standard in covenant interpretation, there would be
no reason to have covenants in the first place. The meaning of the covenants could
change depending upon the various members of the Site Committee and what they
believe the covenants should mean. All homeowners—existing or potential—would be
faced with a moving target when trying to comply with the covenants. Therefore, while a
reasonableness standard is appropriate when reviewing an association’s or committee’s
application of discretionary decisions afforded by the covenants, we interpret the
language and meaning of the covenants in accordance with the principles of contract law.
See Star Valley Ranch Ass’n v. Daley, 2014 WY 116, ¶ 12, 334 P.3d 1207, 1210 (Wyo.
2014).

these phrases are being used synonymously. For the sake of clarity, we will refer to the phrase as used in
the specific language in question—“principal residence site.”
4
 The district court referred to the “principal residence site” as the “primary residence site.” While the
covenants never use the phrase “primary residence site,” it is clear the district court is referring to the
“principal residence site.”
                                                      7
[¶18] The method we use in interpreting covenants is well established:

              We seek to determine and effectuate the intention of the
              parties, especially the grantor(s), as it may appear or be
              implied from the instrument itself. See American Holidays,
              Inc. v. Foxtail Owners Ass’n, 821 P.2d 577, 579 (Wyo. 1991);
              Bowers Welding & Hotshot, Inc. v. Bromley, 699 P.2d 299,
              303 (Wyo. 1985); Kindler [v. Anderson, 433 P.2d 268,] 270-
              71 [(Wyo. 1967)]. Intention of the parties is to be determined
              from the entire context of the instrument, and not from a
              single clause. American Holidays, at 579; Bowers Welding &
              Hotshot, at 303; Kindler, at 270-71. Where the language
              imposing the restriction(s) is clear and unambiguous, we
              construe it according to its plain and ordinary meaning
              without reference to attendant facts and circumstances or
              extrinsic evidence, and the rule of strict construction does not
              apply. . . . American Holidays, at 579; Kincheloe v. Milatzo,
              678 P.2d 855, 859 (Wyo. 1984); Kindler, at 271.

Id., ¶ 12, 334 P.3d at 1210 (quoting Anderson v. Bommer, 926 P.2d 959, 961-62 (Wyo.
1996) (alterations in original). Further, “restrictions upon the use of land are not favored
and, accordingly, such restrictions will not be extended by implication.” Stevens, ¶ 13,
90 P.3d at 1166.

[¶19] The Declarant expressly stated that the purpose of the Riva Ridge covenants is “to
preserve and maintain the natural character and value of the Property for the benefit of all
Owners of the Property or any part thereof.” In order to further this purpose, the
covenants include a section regarding the visibility between structures in Riva Ridge.
That section states: “In order to provide for the maximum privacy and in order to
maintain views from the principal residences on each of the Tracts without buildings or
other structures in the foreground, building envelopes are hereby established for each of
the Tracts.” The section goes on to explain that each tract has a “principal residence site”
which has been approved by Teton County as being in conformance with skylining and
scenic resource overlay regulations. Further, it states that the “principal residence site”
for each of the individual tracts is shown on a topographic map of the area designated at
Exhibit H. Under the covenants, “No structure may be so constructed or placed within a
building envelope so that it is visible from any principal residence site as designated on
Exhibit ‘H’, or from any principal residence site relocated pursuant to the provisions of
these Covenants, Conditions, and Restrictions.”

[¶20] The Baker-Steins argue that the phrase “principal residence site” refers to a
specific point on the ground, and that specific point is shown on Exhibit H. Thus, their

                                             8
proposed home does not need to be invisible from anywhere in the Mueller and Jackson
homes, but only from the specific principal residence sites on the Mueller and Jackson
tracts as shown on Exhibit H. The Appellees argue that the restricted visibility from the
“principal residence site” protects the view from anywhere within a “principal residence.”
They base this argument on the fact that the building envelopes were developed to
“provide for the maximum privacy and in order to maintain views from the principal
residences on each of the Tracts, without buildings or other structures in the
foreground[.]” (Emphasis added). Thus, it is the Appellees’ position that “principal
residence” modifies the word “site” to mean that the covenants are referring to “the site
of a ‘single family residential Structure.”’

[¶21] The language in the covenants about visibility between structures on the tracts is
straightforward and clear. It unambiguously requires that a structure may not be visible
from any “principal residence site.” The covenants then unambiguously state that the
“principal residence site” of each tract is shown on Exhibit H. On Exhibit H, each tract
includes a small box which denotes the location of the “homesite.” Exhibit H contains no
other possible “principal residence site” for each tract. Thus, the plain language of the
covenant states that structures on other tracts may not be visible from that specific
location— the “homesite” or principal residence site—as established on Exhibit H. In
order to adopt the Appellees’ interpretation of “principal residence site,” this Court would
have to deviate from its established procedure in interpreting covenants. We decline to
do so and address the deficiencies in Appellees’ interpretation below.

[¶22] First, to accept the Appellees’ interpretation would mean that “principal residence
site” and “principal residence” essentially have the same meaning. The phrase “principal
residence site” is not defined in the covenants. However, “principal residence” is defined
as “the single family residential Structure, constructed on any Tract of the Property . . . .”
At times, the two phrases are used within the same sentence, signifying that the terms are
not synonymous. For example, when discussing the relocation of the building envelope,
the covenants state, “No portion of a house or principal residence constructed at the
approved relocated principal residence site shall be visible from any designated principal
residence site on any other Tract of the Property.” If the phrase “principal residence site”
means the same thing as the principal residence, as the trial court ruled, the Declarant
would have stated that no portion of a principal residence shall be seen from any other
principal residence. The Declarant did not do so and, instead, used different and distinct
phrases to describe two different and distinct things.

[¶23] Further, the Appellees’ interpretation of the “principal residence site” has no
meaning unless a “principal residence” has already been built on a tract. This conclusion
is contrary to the explicit role the “principal residence site” plays in the overall covenant
scheme. The “principal residence sites” are the only locations of significance that were
designated by the Declarant at the time the covenants were written. The covenants
require the tract owners to determine the placement and shape of the building envelopes,

                                              9
simply requiring that they be a certain size and include within it the “principal residence
site” as shown on Exhibit H. Any structures on the tract must be placed within the
building envelope. Therefore, one cannot even begin to contemplate where a “principal
residence” may be built without first recognizing the existing “principal residence site”
shown on Exhibit H. To accept the Appellees’ interpretation that the “principal residence
site” is simply the site of the principal residence would render this important part of the
covenants meaningless. Shaffer v. Winhealth Partners, 2011 WY 131, ¶ 17, 261 P.3d
708, 713 (Wyo. 2011) (“Our rules of contract interpretation require us to give effect to
each word if possible, and we strive to avoid construing a contract so as to render one of
its provisions meaningless, because each provision is presumed to have a purpose.”)
(Internal quotations and quotation marks omitted).

[¶24] Acceptance of the Appellees’ interpretation would also result in owners who build
their homes later in time being subjected to far more arduous standards than those who
built their homes earlier. Using the Appellees’ logic, the first owner/builder in the
development would not have to worry about the location of his home at all because there
are no other homes in the area from which the first owner’s home may be visible. The
second owner/builder would need to concern himself with only the first owner’s home
because that is the only site of a home in the development. However, the sixth
owner/builder has to be concerned with whether his home will be visible from anywhere
in the five other homes in the area. This is not what the covenants require. The
Declarant clearly stated that the covenants were established for the benefit of all owners
of tracts within Riva Ridge. This fair treatment is further expressed in the covenants by
requiring that no structure be visible from “any principal residence site as designated on
Exhibit ‘H’. . . .” This phrase does not limit visibility from existing homes; instead, it
applies to all principal residence sites regardless of whether a home is built on the tract.
The homesites notated on Exhibit H existed before any houses were built in Riva Ridge,
thus putting all tracts on equal footing when it comes to the visibility requirements of the
covenants.

[¶25] The Appellees argue that interpreting “principal residence site” to mean something
less than the site where the principal residence is built will frustrate the purposes of the
covenants; specifically, “to provide for the maximum privacy and in order to maintain
views from the principal residences on each of the Tracts without buildings or other
structures in the foreground . . . .” They contend this requires complete invisibility
between the homes in Riva Ridge.5 We disagree. “Maximum privacy” is not

5
  The district court relied upon various homeowner’s testimony, including Mr. Mueller’s and the
Jacksons’, as well as Mr. Luther’s deposition to reach the conclusion that the homeowners expected
complete invisibility between the homes when they purchased their tracts, and that the Association
utilized a “long standing fundamental principle that new homes should not be visible from existing
homes.” However, the record contains evidence that calls that principle into question—specifically that
the house on Tract D, which is owned by Robert Ross, is visible from the house located on Tract C, which
is owned by Site Committee member John Campbell, and vice versa. Because the covenants are
                                                  10
synonymous with absolute privacy. “Maximum” is defined as: “The greatest possible
quantity or degree.”             American Heritage Dictionary (5th ed. 2015),
https://ahdictionary.com. Absolute is defined as: “1. a. Unqualified in extent or
degree; total. . . b. Not limited by restrictions or exceptions[.]” Id. Here, the Declarant
sought as much privacy as possible for the owners in Riva Ridge, but could not guarantee
absolute or total privacy. At the time the covenants were established, there were no
homes in Riva Ridge. The Declarant could not know what kind of homes the future
owners would decide to build, how large the homes would be, or where exactly the
homes would be built on each tract. Without knowing all of that information, it was
impossible for the Declarant to guarantee complete invisibility. Instead, they guaranteed
invisibility from the one area on each tract that was established at the time the covenants
were written—the “principal residence site.” Therefore, an interpretation that does not
guarantee absolute or total invisibility, but allows for as much privacy as possible under
the circumstances, does not conflict with the intent of the Declarant or the purpose of the
covenants.

[¶26] Finally, the Appellees point out that the “principal residence site” cannot be a
specific location on the ground because Exhibit H and the covenants do not contain
survey information or give a legal description for each site. It is true that Exhibit H does
not contain survey information; however, we do not believe that means the “principal
residence site” for each tract as marked on Exhibit H does not occupy a precise area on
each tract. Exhibit H clearly shows each distinct tract, includes information regarding the
topography of each tract, and the Appellees acknowledge that Exhibit H is drawn to
scale. Additionally, while we reached our determination regarding the unambiguous
meaning of the covenants without considering the evidence presented at trial, some of
that evidence does demonstrate that the precise location of a “principal residence site”
can be determined. For example, the Baker-Steins produced an exhibit that shows each
of the tracts, where each “principal residence site” is located, and where the “principal
residence” is built on each tract. Mr. O’Malley testified that he reviewed the land
surveying that had been done in Riva Ridge to create and identify the “principal residence
sites” on Exhibit H. Mr. Larson and Mr. O’Malley both testified that they marked the
“principal residence site” on each tract with a green fence post. Therefore, the precise
location of the “principal residence site” can be determined in order to properly enforce
the covenants.

[¶27] We find that the term “principal residence site” for each tract unambiguously
refers to the specific areas illustrated on Exhibit H and identified thereon as “homesite.”
Therefore, to comply with the covenants, the Baker-Steins’ proposed home cannot be

unambiguous, this Court has not relied upon this information in interpreting the covenant’s meaning;
however, the information does call into question the proposition that the Association has always
understood that the covenants require complete invisibility between houses in Riva Ridge.
                                                11
visible from that specific area on the Jacksons’ and Mueller’s property.6 So long as the
proposed home is invisible from those specific locations on the ground of the other tracts,
any visibility from other parts of the homes does not violate the covenants.

Damages Claim

[¶28] The Baker-Steins sought damages for breach of contract against the Appellees
based on the Site Committee’s decisions not to approve the Baker-Steins’ building plans.
The district court granted summary judgment in favor of the Appellees, determining that
the Baker-Steins had not identified any provision of the covenants that would allow them
to seek damages.

[¶29] When reviewing the district court’s decision to grant summary judgment:

                       We have said that the “propriety of granting a motion
                for summary judgment depends upon the correctness of the
                dual findings that there is no genuine issue as to any material
                fact and that the prevailing party is entitled to judgment as a
                matter of law.” Dwan v. Indian Springs Ranch Homeowners
                Ass’n, 2008 WY 74, ¶ 6, 186 P.3d 1199, 1201 (Wyo. 2008)
                (citing W.R.C.P. 56(c)). Summary judgment involves a
                purely legal determination, and accordingly, we undertake de
                novo review of the district court’s decision. Glenn v. Union
                Pacific R.R. Co., 2008 WY 16, ¶ 6, 176 P.3d 640, 642 (Wyo.
                2008). “The facts are reviewed from the vantage point most
                favorable to the party opposing the motion, and we give that
                party the benefit of all favorable inferences that may fairly be
                drawn from the record.” Brumbaugh v. Mikelson Land Co.,
                2008 WY 66, ¶ 11, 185 P.3d 695, 701 (Wyo. 2008).

Star Valley Ranch, ¶ 11, 334 P.3d at 1211.

[¶30] The district court determined as a matter of law that the Baker-Steins could not
prevail on their breach of contract claim. In doing so, the court relied upon this Court’s
decision in Dwan v. Indian Springs Ranch Homeowners Ass’n, Inc., 2010 WY 72, 232
P.3d 1183 (Wyo. 2010) (Dwan II). In Dwan II, the plaintiff sought damages against the

6
  We recognize that the parties may encounter difficulties when determining the “principal residence site”
on Tract E, which is owned by Mr. Mueller. The original owner of that tract requested that the “principal
residence site” be relocated. While the request was approved by the Site Committee, the record is not
clear on whether the request and approval conformed to the relocation requirements in the covenants. If
the previous owner simply built the house in a different area and did not establish a new “principal
residence site,” the original site shown on Exhibit H will be the relevant point of visibility for the Baker-
Steins’ proposed home.
                                                     12
homeowners association for breach of contract after this Court determined the association
had unreasonably denied the plaintiff’s application to build an addition on her home. Id.,
¶ 5, 232 P.3d at 1184. The district court granted summary judgment in favor of the
association and we affirmed. Id., ¶¶ 5, 9, 232 P.3d at 1184, 1186. We explained that,
while covenants are contractual in nature, a homeowner is not necessarily entitled to
recover contract damages against an association. Id., ¶ 9, 232 P.3d at 1186. The plaintiff
had failed to point to any provision in the covenants that would allow her to claim
damages against the association; thus, we concluded that she failed to state a viable cause
of action for damages. Id.

[¶31] Here, the district court determined that, like the plaintiff in Dwan II, the Baker-
Steins failed to identify a provision in the covenants that would entitle them to seek
damages against the Appellees. However, two different sections of the covenants clearly
contemplate that members of the board and site committee may be liable to owners in
some circumstances. Article IV, Section 5 states:

              Section 5. Limited Liability of Board of Directors, etc.
              Members of the Board and their officers, assistant officers,
              agents and employees acting in good faith on behalf of the
              Association:
                      (1) shall not be liable to the Owners as a result of their
              activities as such for any mistake of judgment, negligence or
              otherwise, except for their own willful misconduct or bad
              faith;
                      (2) shall have no personal liability in contract to an
              Owner or any other person or entity under any agreement,
              instrument or transaction entered into by them on behalf of
              the Association in their capacity as such;
                      (3) shall have no personal liability in tort to any
              Owner or any person or entity, except for their own willful
              misconduct or bad faith;
                      (4) shall have no personal liability arising out of the
              use, misuse or condition of the Property which might in any
              way be assessed against or imputed to them as a result of or
              by virtue of their capacity as such.

Article VI, Section 8 of the covenants contains a liability clause that is specific to the Site
Committee:

                    Section 8. Liability. Neither the Site Committee nor
              any member thereof shall be liable to the Association or to
              any Owner for any damage, loss or prejudice suffered or
              claimed on account of (a) the approval of any plans, drawings

                                              13
              and specifications, whether or not defective, (b) the
              construction or performance of any work, whether or not
              pursuant to approved plans, drawings and specifications, (c)
              the Development, or manner of Development, of any property
              within the Property, or (d) the execution and filing of an
              estoppel certificate pursuant to Section 7 above, of this
              Article, whether or not the facts therein are correct; provided,
              however, that such member has, with the actual
              knowledge possessed by him, acted in good faith.

[¶32] These provisions exempt the Board of Directors, Site Committee, and members
thereof from liability in certain circumstances, but those circumstances require that the
underlying action be done in good faith. The logical extension of that limitation is that
liability may exist if the action is done in bad faith. While Section 5 does not use the
specific term “damages,” one cannot be liable or responsible for something that does not
incur damages. Section 8, however, does specifically state the Site Committee and its
members shall not be liable to any owner for damages, so long as the Committee and/or
members were acting in good faith. Thus, if the Site Committee or one of its members
acts in bad faith, it could be liable for the damages sustained by the owner.

[¶33] The Baker-Steins’ allegations are that Mr. Mueller, Mr. Campbell and Mr. Hussey,
in their individual capacities and as members of the Site Committee, acted in bad faith
when they denied the Baker-Steins’ building plans. If the Baker-Steins are able to prove
bad faith, they may be entitled to damages as this is the type of conduct for which the
covenants do not protect the Board of Directors, Site Committee, or its members from
liability. Therefore, the district court erred in granting summary judgment to the
Appellees on the basis that the covenants do not provide the Baker-Steins a cause of
action.

[¶34] The Appellees argue that the Baker-Steins failed to present any evidence of bad
faith at the time the district court granted summary judgment, did not litigate the issue of
bad faith at the trial, and are precluded from doing so now because the district court
determined the Site Committee’s interpretation of the covenant was reasonable. The
Appellees also seem to suggest that because the district court determined the Site
Committee’s interpretation was reasonable, that shows the Committee acted in good
faith. We disagree.

[¶35] The fact that the district court held a bench trial and ultimately ruled in favor of
the Appellees does not preclude the Baker-Steins from litigating the issue of bad faith on
remand. All of the claims that would have required the Baker-Steins to show bad faith at
trial had been resolved by the district court at summary judgment. Thus, the Baker-Steins
had no reason to present evidence regarding bad faith at trial, and to do so may have been
susceptible to a proper objection by the Appellees.

                                            14
[¶36] The Appellees, however, argue that the Baker-Steins did present evidence at trial
that could be indicative of bad faith, such as Mr. Mueller’s potential conflict of interest
and the Site Committee’s amendment to the by-laws after the Baker-Steins filed the
complaint. The Appellees assert that because that evidence was presented and the district
court still determined the Site Committee acted reasonably, the Baker-Steins are
foreclosed from litigating the bad faith claim. As pointed out above, the issue at trial did
not involve whether the Site Committee and its members acted in good faith—the issue
was what does “principal residence site” mean within the covenants. While the evidence
could show bad faith, at the time of trial the evidence was used in an attempt to discredit
Mr. Mueller’s testimony regarding the interpretation of the covenants. Simply because
the Baker-Steins presented some evidence that may be helpful to show bad faith does not
mean they had the opportunity to fully and fairly develop the facts on the bad faith claim,
and that fact should not preclude them from doing so on remand.

[¶37] Further, the Appellees’ interpretation of the covenants was erroneous. Therefore,
any finding by the district court that the Site Committee’s actions were reasonable based
upon its incorrect interpretation of the covenants is also erroneous and cannot be used to
justify the Appellees’ actions. Additionally, the district court never made a determination
of whether genuine issues of material fact existed regarding bad faith. In light of the
facts that Mr. Mueller is the president of the Riva Ridge Owners Association, his home
happens to be one from which the Baker-Steins’ proposed home is visible, the Site
Committee (including Mr. Mueller) rejected the Baker-Steins’ building plans on more
than one occasion based on an incorrect interpretation of the covenants, and the Site
Committee’s actions to amend the Committee by-laws and rules after this litigation
commenced, we believe reasonable minds could differ regarding the Site Committee’s
motives in denying the Baker-Steins’ building permit. Therefore, genuine issues of
material fact exist to determine whether the Appellees acted in bad faith on the breach of
contract claim and the district court’s order granting summary judgment was improper.

Landscaping Provision

[¶38] In their Complaint for Declaratory Judgment, the Baker-Steins sought a
determination from the district court that the covenants do not require an owner to seek
approval from the Site Committee before planting trees on his or her tract. The Baker-
Steins moved for summary judgment on this claim, arguing that the covenants only
contain protections for existing vegetation and trees and does not prohibit planting new
trees. The Appellees responded and agreed that the covenants are unambiguous, but
argued that they unambiguously require Site Committee approval before planting trees.
The district court agreed with all parties that the covenants were unambiguous, but agreed
with the Appellees that, as a matter of law, the covenants require that an owner seek Site
Committee approval before planting trees.

                                            15
[¶39] On appeal, the Baker-Steins argue the district court’s decision was erroneous;
however, the basis of that argument is not entirely clear. Instead of discussing how the
decision was incorrect as a matter of law, the Baker-Steins argue “the Site Committee’s
prohibition on using landscaping as screening is unreasonable, and there were disputed
material facts that should have precluded summary judgment.” The latter argument is
particularly peculiar considering it was the Baker-Steins who moved for summary
judgment on the claim, and all parties agreed the covenants were unambiguous, albeit
reaching         different       conclusions        regarding          their        meaning.
Although the issue had not been raised, the district court determined, after the trial, that
the Site Committee’s denial of the Baker-Steins’ request to use trees as landscaping
screening was reasonable. However, the Baker-Steins clearly are challenging the district
court’s decision in the summary judgment order. Because the Baker-Steins’ argument
that there are genuine issues of material fact necessitating a trial are being raised for the
first time on appeal, we refuse to consider them. See Davis v. City of Cheyenne, 2004
WY 43, ¶ 26, 88 P.3d 481, 490 (Wyo. 2004). Therefore, we will limit our review to the
legal question presented to the district court—do the covenants require Site Committee
permission before an owner can plant trees on his or her tract?

[¶40] As discussed above, the interpretation of a covenant is a question of law that is
reviewed de novo. Stevens, ¶ 12, 90 P.3d at 1165-66. Additionally, we review a district
court’s decision to grant summary judgment de novo. Star Valley Ranch, ¶ 11, 334 P.3d
at 1211.

[¶41] We agree with the district court that the covenants require that the owners receive
approval from the Site Committee before planting trees on a tract. Generally, the
covenants require Site Committee approval for making changes or improvements to the
tract that will alter the natural state of the tract. For example, Article VIII, Section 2
states:

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

Further, Article VIII, Section 3(r)(1) specifically prohibits the removal of trees except in
limited circumstances. Of particular importance, Article VIII, Section 3(o) states:

                                             16
                     (o) No on-site mining or other mineral extraction or
              Development activities shall be permitted on any Tract,
              including the removal of gravel; provided that excavation for
              construction, wildlife enhancement or landscape purposes
              may be permitted with the prior written approval of the
              Board.

The term “Development” is defined in the covenants as: “any alteration of the natural
land surface, and all buildings, Structures or other site improvements on the Property.”
Excavate is not defined in the covenants, but the everyday definition of the term includes
“to remove by digging or scooping out.” American Heritage Dictionary (5th ed. 2015),
https://ahdictionary.com.

[¶42] Planting trees is a common landscaping procedure that can improve a tract of land
on the property. That process cannot be done without altering the existing natural state of
the tract and engaging in some excavation when preparing a hole the tree will occupy.
While this conduct may be minimal compared to other excavations and alterations that
may occur on the tracts, it is excavation for landscaping nonetheless, and the covenants
clearly require Site Committee permission before proceeding. Therefore, we affirm the
district court’s conclusion that an owner must seek the Site Committee’s approval before
planting trees on his or her tract.

                                    CONCLUSION

[¶43] The phrase “principal residence site” in the Riva Ridge covenants is unambiguous
and refers to a precise area of land on each tract, and those areas are shown on Exhibit H
of the covenants. Thus, the covenants require that a “principal residence” be invisible
only from that designated area on each tract and not from any other location within a
“principal residence” on the other tracts. Additionally, the district court erroneously
dismissed the Baker-Steins’ breach of contract claim on summary judgment. The
covenants provide that the Appellees may be liable to the Baker-Steins for damages if
they acted in bad faith. A genuine issue of material fact exists regarding whether the
Appellees acted in bad faith; therefore, summary judgment was inappropriate. However,
the district court properly determined that the Baker-Steins must seek permission from
the Site Committee before planting any trees on their tract.

[¶44] Affirmed in part, and reversed and remanded in part.

                                            17
FORGEY, District Judge, concurring in part and dissenting in part.

[¶45] I concur with the majority to the extent that it affirms the district court’s
interpretation of the Riva Ridge covenants’ “landscaping provision,” but I otherwise
respectfully dissent.

[¶46] In my opinion, the remaining sections of the covenants can also, as a matter of
law, unambiguously be interpreted in the same way as the district court ultimately
interpreted the covenants. It is clear from the plain language of the covenants that:
1) Riva Ridge “contains significant wildlife habitat and is of high scenic and natural
value” and the covenants were adopted “to preserve and maintain the natural character
and value of the Property for the benefit of all Owners of the Property or any part
thereof;” and 2) structures are to be built within a designated area on each Riva Ridge
tract “to provide for the maximum privacy and in order to maintain views from the
principal residences on each of the Tracts without buildings or other structures in the
foreground,” including that “[n]o structure may be so constructed or placed within a
building envelope so that it is visible from any principal residence site as designated on
Exhibit ‘H’, or from any principal residence site relocated . . . .”

[¶47] These provisions, when read together and in a manner that gives effect to all of the
applicable language, require a broader interpretation of the covenants than the
interpretation adopted by the majority. There is no dispute that the drafters of the
covenants intended and anticipated that multi-story structures up to thirty feet high, such
as principal residences, would be built on Riva Ridge tracts.7 The majority’s
interpretation focuses on the term “principal residence site” and limits it to a point or
points on the ground that largely exclude areas within a properly-built principal residence
where one would expect to have a view “without buildings or other structures in the
foreground.” That interpretation ignores and renders meaningless the other language
contained in the same section of the covenants, is contrary to the stated purpose of the
covenants, and will derogate the unobstructed views that all of the Riva Ridge property

7
  The covenants contain a “height restriction” and “design standards such as building heights and roof
pitches” that according to the district court “would serve to define the approximate spatial location of a
prospective building as more than just a point on the ground.” Extrinsic evidence confirms this in that the
attorney who drafted the covenants acknowledged that a principal residence “would be larger than a one-
dimensional point on the ground, as a three-dimensional structure up to 30 feet high” and the majority
mentions that “all of the other homes in the area are approximately thirty feet tall.” Knowing this, the
developers initially used the “story poles” to establish home sites, but at that time “there were no roads in
the subdivision and [there was] no practical way to erect towers or other equipment to replicate the
approximate height of homes”—“there were practical limits on what the surveyors and engineers could
determine when the project was planned” and they simply “could not determine the height and precise
locations of houses that would be built in the building envelopes and encompassing the ‘designated sites’
depicted in Exhibit H.”
                                                     18
owners bargained for.8 “Maximum privacy” means what the covenants say it does—
“views from the principal residences on each of the Tracts without buildings or other
structures in the foreground.”9

[¶48] The majority’s interpretation will allow the Baker-Steins to build structures on
their tract that are visible in the foreground of two other Riva Ridge property owners’
principal residences and minimizes the impact that such an interpretation will have on the
other Riva Ridge property owners. The Baker-Steins may have less flexibility in locating
their proposed structures than Riva Ridge property owners who have already built
structures on their properties, but the instant case is not one in which the covenants, as I
interpret them, would deprive the Baker-Steins from using their property as they intend.
The design the Baker-Steins submitted to the Riva Ridge Site Committee included a
home and detached writer’s studio expected to cost between five and six million dollars.
As the district court concluded, the Baker-Steins

                are not denied the right to build their home. They are able to
                build their home if the design is modified to comply with the
                visibility restriction. Testimony was received that [ ] only the
                top one to two feet of the [proposed] home were visible,
                requiring the home to be either lowered, whether in overall
                height or by digging in to the site, or moved a few feet to the
                west.

[¶49] I would further find that the district court properly granted summary judgment to
the Appellees on the Baker-Steins’ breach of contract claim. Even if the Riva Ridge
covenants allow the Baker-Steins to pursue such a cause of action in this case, the only
evidence of “bad faith” referenced by the majority in holding that “reasonable minds
could differ regarding the [Riva Ridge] Site Committee’s motives in denying the Baker-
Steins’ building permit” and “genuine issues of material fact exist to determine whether
the Appellees acted in bad faith on the breach of contract claim” is as follows: 1) the Site
Committee “rejected all versions” of the Baker-Steins’ building plans because “some of
the Baker-Steins’ proposed home would be visible from some locations” in two adjoining
property owners’ constructed homes; 2) this was based on an “incorrect interpretation of
the covenants;” 3) a member of the Site Committee that rejected the Baker-Steins’
building plans owned property adjoining the Baker-Steins’ property and the Baker-

8
  For example, the district court found that the “low density and unique scenic qualities of the Riva Ridge
tracts results in a uniquely high value for each tract. A neighboring landowner [to the Baker-Steins] . . .
paid $19 million for their tract with an existing home.”
9
  Indeed, the district court found the covenants to be “an intricate scheme for ensuring that the structures,
roads, utilities, and other signs of human presence on each property are hidden, as much as possible, from
the other properties in the subdivision.”

                                                     19
Steins’ proposed home would be visible from that owner’s principal residence; and 4) the
Site Committee sought to “amend the Committee by-laws and rules after this litigation
commenced.” These grounds are insufficient, as a matter of law, to establish “bad faith,”
particularly considering that the Site Committee, in my opinion, relied on a correct
interpretation of the covenants in denying the Baker-Steins’ building plans. There are,
accordingly, no genuine issues of material fact regarding the Baker-Steins’ breach of
contract claim, and the Appellees are entitled to a judgment on the claim as a matter of
law.

[¶50] For these reasons, I would affirm the district court in all respects. My analysis
differs somewhat from that of the district court, but “we may affirm the district court
upon any valid basis appearing in the record.” Arnold v. Day, 2007 WY 86, ¶ 14, 158
P.3d 694, 698 (Wyo. 2007).

                                           20