Court Opinion

ID: 5137867
Source: CourtListenerOpinion
Date Created: 2021-12-21 14:48:01.457539+00
Date Added: 2024-06-11T07:39:20.822425
License: Public Domain

2015 UT App 190

              THE UTAH COURT OF APPEALS

    TODD HOLLOW APARTMENTS AT DEER MOUNTAIN, LP,
                 Plaintiff and Appellant,
                             v.
  HOMES AT DEER MOUNTAIN HOMEOWNERS ASSOCIATION, INC.,
                 Defendant and Appellee.

                           Opinion
                      No. 20130767-CA
                     Filed August 6, 2015

           Fourth District Court, Heber Department
               The Honorable Derek P. Pullan
                        No. 130500044

       Jason D. Boren and Quinton J. Stephens, Attorneys
                         for Appellant
         John A. Snow and Spencer H. Reed, Attorneys
                        for Appellee

  JUDGE J. FREDERIC VOROS JR. authored this Opinion, in which
JUDGES JAMES Z. DAVIS and MICHELE M. CHRISTIANSEN concurred.

VOROS, Judge:

¶1     This wrongful-lien case raises the question of whether a
developer’s right to withdraw its property from a subdivision
survives and is assignable after the developer has sold all its
property in the subdivision. The district court answered the
question in the negative. We agree and affirm.

                       BACKGROUND

¶2    Todd Hollow Apartments at Deer Mountain, LP (Todd
Hollow) is a limited partnership owning an apartment complex
on approximately twenty-six acres of land (the Apartments) in
the Deer Mountain Resort Subdivision (the Subdivision) in
              Todd Hollow v. Homes at Deer Mountain

Wasatch County. Canyon Ridge Apartments at Deer Mountain,
LP (the Master Developer) developed the Apartments as an
affordable housing property pursuant to section 42 of the
Internal Revenue Code of 1986. Todd Hollow has been the
record owner of the Apartments since October 1999.

¶3     In December 2000, the Master Developer recorded a set of
Master Covenants, Conditions & Restrictions (the CC&Rs)
governing a portion of the Subdivision, including the
Apartments. The CC&Rs authorized the Homes at Deer
Mountain Homeowners Association, Inc. (the HOA) to impose
assessments against the properties within its boundaries,
including the Apartments, for ‚the maintenance and operation
of the Common Areas and furnishing any common utility
service and other common items,‛ such as insurance,
landscaping, and repairs.

¶4     The Master Developer retained certain rights under the
CC&Rs, including the right to remove property from the HOA
‚to the extent that such land and Improvements are owned
exclusively by the Master Developer‛ (the Reduction Option).
The CC&Rs also provide that ‚*t+he rights of Master Developer
under this Master Declaration or in any way relating to the
Project may be assigned whereupon the assignee of Master
Developer shall have all the rights of Master Developer
hereunder.‛

¶5     By 2012, Todd Hollow had become dissatisfied with the
HOA and determined to withdraw from it. To do so, Todd
Hollow first obtained an assignment of the Reduction Option
from the Master Developer (the Assignment). Todd Hollow
recorded the Assignment at the Wasatch County Recorder’s
Office on January 13, 2012. That same day, Todd Hollow also
recorded a document entitled ‚Withdrawal of Property from
Deer Mountain and Amendment to Master Association
Declaration and Bylaws‛ (the Withdrawal). In the Withdrawal,
Todd Hollow purported to remove the Apartments from the
HOA pursuant to the Reduction Option it acquired from the
Master Developer. The Withdrawal’s intended effect was that

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              Todd Hollow v. Homes at Deer Mountain

Todd Hollow would no longer be governed by the CC&Rs or
subject to HOA assessments.

¶6     The HOA challenged the validity of the Assignment and
the Withdrawal. The HOA also insisted that Todd Hollow
continue to pay its assessments. When Todd Hollow refused to
pay its assessments, the HOA recorded a Notice of Lien (the
Lien) against the Apartments for $24,446.26, plus interest, late
fees, and attorney fees and costs. The HOA recorded the Lien at
the Wasatch County Recorder’s Office on October 19, 2012.

¶7     Todd Hollow twice asked the HOA to remove the Lien.
The HOA refused. On May 2, 2013, Todd Hollow filed a Verified
Petition to Nullify Wrongful Lien (the Petition) with the district
court pursuant to section 38-9-7 of the Utah Code. In the Petition,
Todd Hollow requested that the district court nullify the Lien as
a ‚wrongful lien‛ pursuant to section 38-9-1(6) of the Utah Code
and award it attorney fees, as provided by sections 38-9-4 and
38-8-7(5)(a).

¶8     The parties fully briefed the issues raised in the Petition,
and the district court held a hearing on June 11, 2013. Arguments
focused on the validity and legal effect of the Assignment and
the Withdrawal. The district court dismissed the Petition on the
ground that the Assignment and Withdrawal were ineffective
and did not remove the Apartments from the HOA. The district
court thus concluded that the Apartments remained within the
HOA and subject to the CC&Rs. Consequently, it concluded, the
Lien was lawful. Todd Hollow appeals.

                      ISSUES ON APPEAL

¶9    First, Todd Hollow contends that the district court
exceeded its authority under the Wrongful Lien Act by
adjudicating the ‚validity and legality‛ of Todd Hollow’s
Withdrawal in a summary proceeding.

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              Todd Hollow v. Homes at Deer Mountain

¶10 Second, Todd Hollow contends that even assuming the
district court did not exceed its statutory authority, the district
court erred in concluding that Todd Hollow’s Withdrawal was
ineffective under the CC&Rs.

¶11 Third, Todd Hollow contends that if this court does not
conclude that Todd Hollow’s Withdrawal was effective as a
matter of law, we should instead conclude that the CC&Rs are
ambiguous and thus remand the case to the district court for an
evidentiary hearing to determine the meaning and intent of the
Reduction Option.

                           ANALYSIS

  I. The District Court’s Authority to Adjudicate the Wrongful
                           Lien Claim

¶12 Todd Hollow first contends that by dismissing the
Petition with prejudice the district court ‚exceeded its authority
under the Wrongful Lien Act.‛ See Utah Code Ann. § 38-9-7(4)
(LexisNexis 2010) (establishing the scope of a summary
proceeding to determine the lawfulness of a lien). The HOA
responds that ‚the district court’s decision was within the scope
of authority under the Wrongful Lien *Act+‛ and that, in any
event, Todd Hollow invited any error. We agree that any
possible error was invited.

¶13     Under the invited-error doctrine, ‚a litigant may not
induce the [district] court to make a ruling and then argue on
appeal that the ruling was in error.‛ Kerr v. Salt Lake City, 2013
UT 75, ¶ 44, 322 P.3d 669. The invited-error doctrine ‚is crafted
to discourage[] parties from intentionally misleading the
[district] court so as to preserve a hidden ground for reversal on
appeal‛ and ‚to give the *district+ court the first opportunity to
address the claim of error.‛ State v. Geukgeuzian, 2004 UT 16,
¶ 12, 86 P.3d 742 (first alteration in original) (citation and
internal quotation marks omitted).

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              Todd Hollow v. Homes at Deer Mountain

¶14 Todd Hollow filed the Petition to have the HOA’s Lien
declared invalid. In so doing, it invited the district court to rule
that the Withdrawal lawfully removed the Apartments from the
HOA under the Reduction Option and thus that the HOA lacked
authority to record the lien:

       The [HOA] has no right or authority to impose an
       assessment on Todd Hollow following Todd
       Hollow’s exercise of its right to withdraw the . . .
       [Apartments] from the . . . [HOA]. Likewise, the
       [HOA] has no right to record a lien against the . . .
       [Apartments] under the Master Declaration[,]
       because Todd Hollow is no longer subject to the
       Master Declaration following the withdrawal of the
       . . . [Apartments] from the . . . [HOA].

The district court expressly queried Todd Hollow’s counsel on
whether that position cut both ways: ‚You concede that . . . if the
withdrawal of the . . . property from the subdivision is void that
there is statutory authority for the [HOA] to impose the lien?‛
Todd Hollow’s counsel responded, ‚[Y]es. . . . It comes down to
whether or not the withdrawal was proper.‛

¶15 Todd Hollow argues on appeal that the Petition asked the
district court to declare the lien wrongful, and that the
Withdrawal ‚forms the basis of Todd Hollow’s petition.‛ Yet it
insists that its ‚briefing never presents Todd Hollow’s
withdrawal as a question but rather, in the way of educating the
Court on the background of the situation states, matter of factly,
that Todd Hollow withdrew from the [HOA] and is no longer
subject to the [HOA’s] claimed assessment.‛ Nevertheless, the
HOA responded by challenging the basis of Todd Hollow’s
claim—the enforceability of the Withdrawal. Accordingly, the
Petition squarely placed before the district court the decisive
question: whether Todd Hollow could, as assignee of the Master
Developer, exercise the latter’s rights under the Reduction
Option. Todd Hollow’s stated rationale for its desired result
presupposed that the district court had the authority to
adjudicate the validity of the Withdrawal under the Wrongful

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              Todd Hollow v. Homes at Deer Mountain

Lien Act.1 Todd Hollow now argues in effect that the Wrongful
Lien Act authorized the district court to enforce the Withdrawal
and rule the lien wrongful, but not to void the Withdrawal and
rule the lien rightful. However, Todd Hollow assured the district
court that the court had authority to answer the question
regardless of what the answer was.

¶16 Thus, even assuming that the district court erred in
concluding that it had the authority to adjudicate the validity of
the Withdrawal in a summary proceeding, Todd Hollow invited
the error. Accordingly, Todd Hollow’s challenge to the district
court’s authority fails.

             II. Assignment of the Reduction Option

¶17 Todd Hollow next contends that even if the district court
did not exceed its statutory authority in adjudicating the
lawfulness of the lien under the Wrongful Lien Act, it erred in
concluding that the CC&Rs do not permit the Withdrawal.
Specifically, Todd Hollow argues that because ‚an assignee
stands in the shoes of the assignor and acquires the same rights
as the assignor,‛ all of the Master Developer’s rights set forth in
the CC&Rs, including the right of Withdrawal, survived the
Assignment of those rights to Todd Hollow. Todd Hollow thus
argues that as assignee it acquired ‚all of the Master Developer
Rights,‛ including the ‚exclusive right and option . . . to reduce
the Project.‛ Todd Hollow then exercised that Reduction Option
to remove the Apartments from the HOA.

¶18 The HOA responds that ‚the district court correctly ruled
that any right to withdraw the [Apartments] under the
‘Reduction Option’ expired by its own terms prior to the

1. The Wrongful Lien Act provides in relevant part that ‚*a+
summary proceeding under this section is only to determine
whether or not a document is a wrongful lien‛ and ‚shall not
determine any other property or legal rights of the parties.‛ Utah
Code Ann. § 38-9-7(4) (LexisNexis 2010).

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              Todd Hollow v. Homes at Deer Mountain

attempted exercise of the *Reduction+ Option.‛ This is so, the
HOA reasons, because the Master Developer no longer owned
any property within the Subdivision at the time it assigned its
rights to Todd Hollow.

¶19 The interpretation of restrictive covenants ‚is governed
by the same rules of construction as those used to interpret
contracts.‛ Swenson v. Erickson, 2000 UT 16, ¶ 11, 998 P.2d 807.
‚We review the interpretation of a contract for correctness.‛
Osguthorpe v. Wolf Mountain Resorts, LC, 2013 UT 12, ¶ 7, 322 P.3d
620. ‚Well-accepted rules of contract interpretation require that
we examine the language of a contract to determine the meaning
and intent.‛ Glenn v. Reese, 2009 UT 80, ¶ 10, 225 P.3d 185.

¶20 In 2000, the Master Developer recorded the CC&Rs.
Article 17.1 of the CC&Rs creates the Reduction Option, which
allows the Master Developer to withdraw land owned by the
Master Developer from the HOA:

      Master Developer herewith expressly reserves the
      unconditional and exclusive right and option . . . to
      reduce the Project (the ‚Reduction Option‛) by
      withdrawing or eliminating from the Project any
      land, Improvements and associated Common
      Areas to the extent that such land and Improvements
      are owned exclusively by Master Developer (collectively,
      the “Reduced Property”). Master Developer reserves
      the right to exercise all or any portion of the
      Reduction Option and to separately develop all or
      any portion of the Reduced Property at any time.

(Emphasis added.) In 2005, the Master Developer sold its last
remaining interest in the Subdivision property. As of that date,
the Master Developer no longer ‚owned exclusively‛ any
interest in the Subdivision.

¶21 Seven years later, the Master Developer assigned all of its
remaining rights to Todd Hollow:

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              Todd Hollow v. Homes at Deer Mountain

      Assignor hereby assigns, transfers, conveys and
      sets over to Assignee all of the Master Developer
      rights. From and after the date hereof, Assignee
      shall have the right subject to the terms of this
      Assignment, to exercise all of the Master Developer
      Rights and Assignee shall be considered the Master
      Developer for purposes of exercising such rights.

¶22 The parties differ as to what rights Todd Hollow received
by this assignment. The HOA contends—and the district court
ruled—that the Master Developer’s right to withdraw property
‚owned exclusively by‛ the Master Developer expired when the
Master Developer no longer owned any property in the
Subdivision. Todd Hollow contends that the Master Developer’s
right to withdraw property it owned continued to exist—and
could be assigned—even after the Master Developer no longer
owned any property to which the Reduction Option could
attach.

¶23 We agree with the HOA. ‚It is well established that an
assignor cannot assign rights he or she does not have.‛ West v.
Inter-Financial, Inc., 2006 UT App 222, ¶ 4 n.1, 139 P.3d 1059.
‚The assignee acquires all of the rights and remedies possessed
by the assignor at the time of the assignment . . . .‛ 6A C.J.S.
Assignments § 110 (2004). But an ‚assignee gains nothing more,
and acquires no greater interest than had his assignor.‛ Sunridge
Dev. Corp. v. RB & G Eng’g, Inc., 2010 UT 6, ¶ 13, 230 P.3d 1000
(citation and internal quotation marks omitted). Thus, ‚the
assignee never stands in a better position than the assignor.‛
SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., Inc.,
2001 UT 54, ¶ 16, 28 P.3d 669 (emphasis, citation, and internal
quotation marks omitted).

¶24 At the time of this assignment, Article 17.1 of the CC&Rs
granted the Master Developer the right to ‚reduce the
Project . . . by withdrawing or eliminating from the Project any
land, Improvements and associated common areas to the extent
that such land and Improvements are owned exclusively by Master
Developer.‛ (Emphasis added.) However, at that time no land or

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              Todd Hollow v. Homes at Deer Mountain

improvements were owned exclusively by the Master
Developer. It thus had no right under Article 17.1 to withdraw
anything. Consequently, it had no Reduction Option to assign,
and Todd Hollow received no reduction right in the assignment.
‚Generally, an assignment passes to the assignee only the
assignor’s rights . . . with respect to such property or interests as
are comprehended by the terms of the assignment or intended to
be transferred.‛ 6A C.J.S. Assignments § 90 (2004).

¶25 In sum, we reject Todd Hollow’s claim because, having
conveyed away all its property, the Master Developer could not
separately assign its right to withdraw that property from the
HOA.

                      III. Contract Ambiguity

¶26 Finally, Todd Hollow contends that if we conclude that
‚the CC&Rs do not unambiguously support the validity of Todd
Hollow’s withdrawal, *we+ should find the CC&Rs ambiguous
and remand for an evidentiary hearing.‛

¶27 ‚A contractual term or provision is ambiguous if it is
capable of more than one reasonable interpretation because of
uncertain meanings of terms, missing terms, or other facial
deficiencies.‛ Daines v. Vincent, 2008 UT 51, ¶ 25, 190 P.3d 1269
(citation and internal quotation marks omitted). Neither party
has claimed that the provisions of the CC&Rs suffer from such
an ambiguity here; rather, they disputed the legal effect of those
provisions. And we have concluded that the legal effect of those
provisions is that after conveying away all its property the
Master Developer had no Reduction Option left to assign.
Accordingly, we see no need to remand this case for an
evidentiary hearing to resolve contract ambiguity.

                          CONCLUSION

¶28    The judgment of the district court is affirmed.

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