Court Opinion

ID: 6331771
Source: CourtListenerOpinion
Date Created: 2022-04-14 17:10:59.368714+00
Date Added: 2024-06-11T09:23:14.472115
License: Public Domain

138 Nev., Advance Opinion 4211
                          IN THE SUPREME COURT OF THE STATE OF NEVADA

                   JEROME MORETTO, TRUSTEE OF                             No. 82565
                   THE JEROME F. MORETTO 2006
                   TRUST,
                   Appellant,
                   vs.
                   ELK POINT COUNTRY CLUB
                   HOMEOWNERS ASSOCIATION, INC.,
                   Respondent.

                              Appeal from a district court judgment in an action for injunctive
                   and declaratory relief concerning a common-interest-community
                   homeowners association's power to adopt rules. Ninth Judicial District
                   Court, Douglas County; Nathan Tod Young, Judge.
                              Affirmed in part, reversed in part, and remanded.

                   Lemons, Grundy & Eisenberg and Robert L. Eisenberg and Todd R.
                   Alexander, Reno,
                   for Appellant.

                   Resnick & Louis, P.C., and Prescott T. Jones and Carissa Yuhas, Las Vegas,
                   for Respondent.

                   BEFORE THE SUPREME COURT, SILVER, CADISH, and PICKERING,
                   JJ.

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                                 OPINION

By the Court, CADISH, J.:
            In this appeal, we are asked to consider the extent of a common-
interest-community homeowners association's power to adopt rules
restricting the use and design of individually owned properties.
Specifically, we are asked to adopt sections 6.7 (use restrictions) and 6.9
(design restrictions) of the Restatement (Third) of Property: Servitudes.
Both sections provide that a homeowners association does not have the
implied power to impose use or design restrictions on individually owned
properties and that the association's governing documents must expressly
authorize the imposition of such restrictions to do so. In addition, these
sections suggest that any such restrictions should be subject to a
"reasonableness" requirement.
            We conclude public policy favors the adoption of sections 6.7 and
6.9 of the Restatement (Third) of Property: Servitudes. These two sections,
when read in conjunction, provide well-reasoned limits on construing an
association's implied power to act with respect to individually owned
property. Therefore, we now adopt the approach from these two sections.
As applied to the underlying matter, we conclude that article 16, section 3
of the respondent homeowners association's bylaws includes an express
provision allowing it to adopt design restrictions for individually owned
property. However, during the proceedings before the district court, neither
party addressed whether the respondent's exercise of its design-control
power was reasonable, which is a central tenet of section 6.9. As a result,
we reverse the district court's grant of summary judgment with respect to
appellanes claim for declaratory relief, which sought to invalidate
respondenes newly adopted architectural and design rules. Additionally,

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we reverse the district court's grant of summary judgment with respect to
appellant's accompanying violation of property rights claim. We remand
the case back to the district court to consider whether respondent's rules
are reasonable under sections 6.7 and 6.9 of the Restatement (Third) of
Property: Servitudes.
               FACTS AND PROCEDURAL BACKGROUND
             Respondent Elk Point Country Club Homeowners Association,
Inc. (hereinafter EPCC), is the governing body of the Elk Point subdivision,
a common-interest community located at Lake Tahoes Zephyr Cove, in
Douglas County, Nevada. EPCC was initially established in 1925 to
manage land owned by the Northern Nevada chapter of the Elks Club. At
that time, the land was held as a vacation area for local Elks Club members.
Beginning in 1929, EPCC began selling individual lots within the
subdivision. Since then, the subdivision has consisted of both individual
lots held in private ownership and common property held by EPCC for the
benefit of all individual property owners within the community. EPCC has
retained control of the operation of common areas and facilities within the
community.
             EPCC, as part of its management structure, has both articles of
incorporation and bylaws. Like most bylaws, EPCCs bylaws set forth the
governing rules by which EPCC operates, including establishing a five-
person executive board tasked with managing the affairs of the community.
Also included in its bylaws is a provision giving EPCC's executive board the
power to adopt rules and regulations necessary to carry out its powers.
Specifically, EPCCs bylaws authorize the executive board to "make rules
and regulations not inconsistent with the laws of the State of Nevada, the
Articles of Incorporation and the Bylaws of the Corporation."

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           EPCC's governing documents are somewhat different from
most modern common-interest communities in that the covenants
restricting individual property owners are included in its bylaws, as
opposed to having a separate declaration of covenants, conditions, and
restrictions (CC&Rs). Pertinent to this appeal, however, the bylaws include
article 16, section 3, which imposes a restriction requiring individual
landowners to seek approval of EPCC's executive board prior to
constructing any structures on their individually owned property.
           Appellant Jerome Moretto took title to property in the Elk Point
subdivision in 1990. Included in Moretto's chain of title was a provision
stating that his property was subject to any and all bylaws, rules, and
regulations that EPCC establishes. At all relevant times, EPCC's bylaws
included article 16(3)'s restriction requiring EPCC to pre-approve
construction of any structure on individually owned lots prior to its
commencement.
           In 2018, EPCC's executive board, exercising its rulemaking
authority, adopted a regulation establishing an architectural review
committee. At the same time, the executive board adopted a set of
guidelines titled, "Architectural and Design Control Standards and
Guidelinee (Architectural Guidelines). These guidelines created detailed
restrictions on individually owned lots, including restrictions regarding
building height and setbacks as well as design-control restrictions
regarding exterior lighting, building materials, and landscaping. The new
regulations required any landowner wanting to develop their lot to comply
with these new guidelines and to submit any proposed plans to the
architectural review committee, which, in turn, would recommend to the
executive board whether to approve the proposed development.

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              In response to these new guidelines, Moretto filed a complaint
seeking, among other things, a declaration that the new guidelines exceed
the scope of EPCC's rulemaking authority. EPCC filed its answer, and both
parties subsequently filed competing motions for summary judgment.
EPCC pointed to article 16(3) of the bylaws regarding its authority to
approve construction on individually owned lots and its general rulemaking
authority as the basis for its ability to adopt the Architectural Guidelines.
Moretto argued EPCC did not have any express power to adopt the
Architectural Guidelines and advocated that the district court interpret an
association's implied power to adopt rules under NRS Chapter 116 as being
limited consistent with sections 6.7 and 6.9 of the Restatement (Third) of
Property: Servitudes. The district court, without addressing Moretto's
argument regarding sections 6.7 and 6.9 of the Restatement (Third) of
Property: Servitudes, held that EPCC did have the authority to adopt rules
to control the design of individually owned property and therefore did not
exceed the scope of its authority when adopting the Architectural
Guidelines. This appeal followed.
                               DISCUSSION
              We review de novo a district court's grant of summary
judgment. Wood v. Safetvay, Inc., 121 Nev. 724, 729, 121. P.3d 1026, 1029
(2005). Summary judgment is proper when no genuine issue of material
fact exists, such that the moving party is entitled to judgment as a matter
of law. Id.
              On appeal, the parties arguments are similar to the ones
presented to the district court. Moretto advocates that this court should
adopt sections 6.7 and 6.9 of the Restatement (Third) of Property:
Servitudes. He contends that section 6.9 requires that an association must

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have express power to adopt design control restrictions, which EPCC does
not have. Instead, he suggests that under the principles outlined in section
6.7, EPCC only possesses a general rulemaking power and therefore is
limited in its power to adopt restrictions concerning individually owned
property. EPCC does not address whether we should adopt sections 6.7 and
6.9 of the Restatement (Third) of Property: Servitudes but instead argues
that its adoption of the Architectural Guidelines was within the scope of its
authority under its bylaws.
Restatement (Third) of Property: Servitudes sections 6.7 and 6.9
            Moretto urges this court to adopt sections 6.7 and 6.9 of the
Restatement (Third) of Property: Servitudes.1 Where parties raise issues of
a purely legal nature, we will conduct a plenary review. St. James Vill., Inc.
v. Cunningham, 125 Nev. 211, 216, 210 P.3d 190, 193 (2009).
            Sections 6.7 and 6.9 concern an association's authority to adopt
rules regarding the use and design of individually owned properties in a
common-interest community. Section 6.7 of the Restatement (Third) of

       1We reject EPCC's contention that Moretto did not properly preserve
the issue of whether this court should adopt the Restatement's approach. It
is a well-recognized rule that issues not raised by a party in the district
court are deemed waived on appeal. See Old Aztec Mine, Inc. v. Brown, 97
Nev. 49, 52, 623 P.2d 981, 983 (1981). However, as EPCC concedes, Moretto
raised the argument regarding the Restatement's approach in its briefing
to the district court. Old Aztec's bar applies in the limited circumstances
where the issue has not been "urged in the trial court." See id. While
Moretto is now urging this court to expressly adopt the Restatement's
approach, as opposed to asking the district court to interpret NRS Chapter
116 as being limited by the Restatement's nonbinding principles, we do not
consider this to be materially different from the point he "urged in the trial
court." Moreover, because we are considering this issue de novo, we do not
concern ourselves with the parties arguments regarding whether the
district court properly considered this issue.

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Property: Servitudes provides that an association authorized to adopt rules
under a general grant of such power may adopt rules concerning the use of
individually owned property only to the extent they relate to the protection
of common property or to the prevention of nuisance-like activities.
Restatement (Third) of Prop.: Servitudes § 6.7(3) (Am. Law Inst. 2000).
General rulemaking powers are construed narrowly because a contrary
interpretation runs counter to the traditional expectation that landowners
are free to use their property in any manner not expressly prohibited, with
the limited exception being that an association is permitted to protect
against neighborhood nuisances by adopting preventative rules. Id. at cmt.
b.
            While section 6.7 concerns an association's power to adopt rules
governing the use of property, section 6.9 concerns an association's power to
adopt rules to control the design of individually owned properties. See
generally Restatement (Third) of Prop.: Servitudes § 6.9 (Am. Law Inst.
2000). Section 6.9 states this:
            Except to the extent provided by statute or
            authorized by the declaration, a common-interest
            community may not impose restrictions on the
            structures or landscaping that may be placed on
            individually owned property, or on the design,
            materials, colors, or plants that may be used.
            "The purpose of this section is to negate the existence of implied
design-control powers." Id. at cmt. b. Section 6.9s rationale parallels the
reasoning of section 6.7, that an association does not have the implied power
to restrict the design of individually owned property because such
restrictions are neither necessary for "the effective functioning of the
community" nor "further public interests or fulfill reasonable expectations
of the property owners." Id. at cmt. a. This stance—that design control

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                      powers are valid only when expressly stated—protects individual
                      landowners reliance interest that an association cannot impose design-
                      control restrictions absent express authorization by the association's
                      declaration. Id. Specifically, "[1] ong tradition supports the individual's
                      right to determine the aesthetic qualities of the home and, within limits
                      imposed by zoning and building codes, to construct structures that suit his
                      or her tastes and needs." Id.
                                  Sections 6.7 and 6.9s stance regarding an association's implied
                      authority to act with respect to individually owned property comes from the
                      broader discussion in comment b to section 6.7 addressing the differences
                      between restrictions that are imposed as part of the association's
                      declaration versus those adopted through the association's rulemaking
                      power. See generally Restatement (Third) of Prop.: Servitudes § 6.7 cmt, b.
                      Specifically, "rules are usually adopted by the governing board, or by a
                      simple majority of the owners who vote on the question, and are seldom
                      recorded." Id.   This can be contrasted with restrictions included in a
                      declaration that "is recorded before individual properties are sold and
                      usually can be amended only with the consent of a supermajority of the
                      property owners." Id. The drafters worried that if an association's implied
                      power to act is construed broadly, an association may be able to adopt
                      restrictions concerning the use of individually owned property without the
                      "notice and the safeguards afforded by the supermajority vote needed for an
                      amendment to the declaration." Id.
                                 Additionally, the drafters described the difference between an
                      association's power and responsibility over common property and that over
                      individually owned property. Id. While "an association enjoys an implied
                      power to make rules in furtherance of its power over the common property,"
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                   it "has no inherent power to regulate use of the individually owned
                   properties in the community, . . . except as implied by its responsibility for
                   management of the common property."           Id.   It is this rationale that
                   underlies the conclusion that unless an association is expressly given a
                   more expansive power, a generally worded rulemaking power included in
                   an association's declaration does not provide an association with a broad
                   implied power to adopt rules to regulate either the use or design of
                   individually owned property.
                               We have previously adopted sections of the Restatement (Third)
                   of Property: Servitudes when doing so furthered public policy and was
                   consistent with Nevada law. See St. James Vill., 125 Nev. at 218-19, 210
                   P.3d at 195 (adopting section 4.8 of the Restatement (Third) of Property:
                   Servitudes and holding the public policy interests advanced by adopting the
                   rule outweighed the potential of any increased litigation associated with its
                   adoption); see also Artemis Expl. Co. v. Ruby Lake Estates Homeowner's
                   Asen, 135 Nev. 366, 372, 449 P.3d 1256, 1260 (2019) (applying Restatement
                   (Third) of Property: Servitudes section 6.2). Moreover, the Restatement's
                   approach is consistent with the importance and high value Nevada law
                   places on private property ownership and use. See McCarran Int'l Airport
                   v. Sisolak, 122 Nev. 645, 659, 137 P.3d 1110, 1120 (2006) (stating "it is clear
                   that Nevadans property rights are protected by our State Constitution");
                   State v. Hill, 59 Nev. 231, 239, 90 P.2d 217, 220 (1939) (stating
                   unconstitutional regulation of private property constitutes an "invasion
                   of . . . [individual] property rights"). Additionally, we conclude that the
                   Restatement's approach is consistent with NRS 116.31065s requirement
                   that an association's rules be reasonably related to the specified purpose for
                   which they are adopted, sufficiently explicit in their prohibition, and in all

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other aspects consistent with the association's governing documents. See
NRS 116.31065(1), (2), and (4).
             In weighing the interests discussed above, we conclude that
public policy interests and Nevada's strong protection of private property
owners expectations and ownership rights are best served by adopting the
Restatement's approach. Specifically, we believe that the drafters' rationale
for these two sections is particularly persuasive. Taking the approach that
an association does not have an inherent power to regulate individually
owned property protects the traditional expectations of landowners, ensures
landowners are afforded proper notice before restrictions are imposed on
their individual property, and prevents an association from circumventing
the procedural protections landowners would be afforded if the association
had adopted the design-control restrictions as covenants in the association's
declaration. Additionally, we recognize that design-control restrictions,
where legitimately promulgated, may benefit individual property owners
within a community. Specifically, requiring a uniform design among
individual properties may contribute to an increase in property values by
preventing aesthetic nuisances. Restatement (Third) of Prop.: Servitudes
§ 6.9 cmt. d. Further, uniformly applied restrictions may improve residents'
quality of life. See id.
             For these reasons, we adopt sections 6.7 and 6.9 of the
Restatement (Third) of Property: Servitudes to govern issues concerning an
association's authority to enact rules regarding the restriction of
individually owned property.
Under Restatement sections 6.7 and 6.9, EPCC had the authority to adopt
the Architectural Guidelines
             Moretto contends that, under the Restatement's approach,
EPCC did not possess the authority to adopt the Architectural Guidelines.

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Specifically, he appears to argue that (1) EPCC's bylaws only provide the
association with a generally worded rulemaking power and (2) even if the
bylaws did expressly authorize EPCC to adopt the Architectural Guidelines,
EPCC does not have a recorded declaration of CC&Rs that expressly
authorizes it to do so.
            The district court concluded that article 16(3) of EKC's bylaws
authorized EPCC to adopt the Architectural Guidelines. Applying the
Restatement's approach, we agree with the district court's conclusion.
            Article 16(3) states that "[Lilo structure of any kind shall be
erected or permitted upon the premises of any Unit Owner, unless the plans
and specifications shall have first been submitted to and approved by the
Executive Board." We conclude that article 16(3) falls squarely within the
type of express authorization that section 6.9 requires to allow an
association to adopt design-control restrictions. Restatement (Third) of
Prop.: Servitudes § 6.9 cmt. c (stating a provision authorizing an association
to "approve or disapprove any construction or alteration of the landscape
within the community" constitutes a valid express design-control power).
By requiring approval of the plans and specifications for any new
construction, article 16(3) plainly contemplates the ability of the executive
board to review and apply appropriate standards to evaluate those items.
Adopting rules to carry out that express power is thus permissible.
            Instead of addressing this section of EPCC's bylaws, Moretto
addresses only article 3(2), which states, "Mhe Executive Board shall have
the power to conduct, manage and control the affairs and business of the
Corporation and to make rules and regulations not inconsistent with the
laws of the State of Nevada, the Articles of Incorporation and the Bylaws of
the Corporation." Neither party disagrees that this provision constitutes a

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generally worded rulemaking power and, if standing alone, would be
insufficient to adopt the Architectural Guidelines based on Restatement
section 6.7.2 But we disagree with Moretto's overall conclusion that EPCC
has no authority to adopt design-control restrictions because, as indicated,
article 16(3) is a valid restrictive covenant that authorizes EPCC to adopt
rules to control the design of individually owned property within the Elk
Point community.
            We also disagree with Moretto's second argument that for a
restrictive covenant affecting individually owned property to be valid, it
rnust be included in a separate declaration of CC&Rs. Restatement section
6.9 requires only that an express grant of authority be included in the
association's "declaration," which is defined as "[a] recorded document or
documents containing servitudes that create and govern the common-
interest community." Restatement (Third) of Prop.: Servitudes § 6.2(5) (Am.
Law Inst. 2000). EPCC's bylaws were recorded in Douglas County and,
thus, fall squarely under the Restatement's definition of a declaration.3

      2As Moretto points out, even EPCC admitted in its motion for
summary judgment that it does not view article 3(2) as constituting a
specific grant of authority.

      3We   note that NRS 116.037 defines a "declaration" as "any
instruments, however denominated, that create a common-interest
community, including any amendments to those instruments." Under this
definition, most common-interest communities bylaws would not constitute
a "declaration," and this opinion should not be construed as generally
equating a common-interest community's bylaws with its "declaration."
Here, however, Moretto has not relied on NRS 116.037, and EPCC was
created in 1925, long before NRS Chapter 116 took effect in 1992. See 1991
Nev. Stat., ch. 245, § 142, at 587 (adopting the Uniform Common-Interest
Ownership Act effective Jan. 1, 1992). Moreover, we have previously
declined to apply sections of NRS Chapter 116 to common-interest

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                      Because these restrictions were contained in EPCC's bylaws that were
                      publicly recorded, Moretto and others within the Elk Point community were
                      on notice that the association had the authority to pre-approve the
                      construction of structures on individually owned property.4
                                  In conclusion, under the Restatement's approach, article 16(3)
                      constitutes a valid restrictive covenant expressly authorizing EPCC to
                      adopt the Architectural Guidelines.
                      The record on appeal does not demonstrate whether the Architectural
                      Guidelines are reasonable
                                 Although we agree with the district court's conclusion that
                      EPCC had the authority to adopt the Architectural Guidelines, we
                      nevertheless remand for the district court to consider whether the

                      communities that formed prior to the Legislature's adoption of the Uniform
                      Common-Interest Ownership Act when doing so is inconsistent with
                      legislative intent and strict adherence would lead to unreasonable results.
                      See Artemis, 135 Nev. at 372-74, 449 P.3d at 1260-62 (holding NRS
                      116.3101(1)s requirement did not apply to pre-1992 common-interest
                      communities). Applying the same rationale discussed in Artemis, we hold
                      NRS 116.037s definition does not apply to EPCC as a pre-1992 common-
                      interest community because strict adherence to NRS 116.037s definition of
                      a declaration would otherwise frustrate the purpose of subjecting
                      communities such as EPCC, which does not have a separate declaration of
                      CC&Rs, to NRS Chapter 116. EPCC's bylaws can only be amended by a
                      supermajority vote, so they in essence function as a declaration of CC&Rs
                      insofar as EPCC and its individual property owners are concerned. Thus,
                      based on the specific facts and arguments presented in this case, we
                      conclude that NRS 116.037s definition does not apply and EPCC's bylaws
                      fall within the Restatement's definition of a "declaration."

                           4A1though   Moretto purchased his property in 1990 and the record on
                      appeal only contains a copy of EPCC's bylaws recorded in 2005, Moretto
                      acknowledges that he had notice of and was subject to the bylaws at the
                      time of his purchase.
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Architectural Guidelines are reasonable and thus valid under Restatement
section 6.9.
               We recognize the concerns that arise when an association's
declaration, like EPCC's, affords the association a highly discretionary
power to effectuate design-control restrictions. In fact, comment d to section
6.9 highlights these concerns:
               Discretionary design controls create two kinds of
               risks for property owners. [First,] Whey may not be
               able to develop in accordance with their
               expectations because they cannot predict how the
               controls will be applied. Second, property owners
               may be subject to arbitrary or discriminatory
               treatment because there are no standards against
               which the appropriateness of the power's exercise
               can be measured.
Restatement (Third) of Prop.: Servitudes § 6.9 cmt. d. To safeguard against
these concerns, the drafters note that courts that have considered this issue
have, instead of invalidating the power, imposed a reasonableness
requirement. Id. In the context of the adoption of association guidelines,
as occurred here, the Restatement notes that consistent application of the
guidelines is
               nearly always upheld if within the scope of the
               design-control power granted by the declaration.
               Decisions made without deliberation and
               articulation of reasons for the decision, decisions
               based on irrelevant criteria or erroneous
               information, and decisions that violate association
               guidelines are nearly always held unreasonable.
               Determining whether design-control powers have
               been unreasonably exercised requires a fact-
               specific, case-by-case inquiry.
Id. Thus, while we hold that EPCC had authority to adopt the Architectural
Guidelines based on article 16(3) of the bylaws, this does not mean it has

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unfettered authority to impose any and all restrictions. Rather, we hold its
authority is cabined by a reasonableness requirement in order to protect the
rights and expectations of the individual property owners.
            The reasonableness test strikes a balance between ensuring an
association's action is not beyond the scope of its authority while otherwise
deferring to the substance of the association's action.        Id.   Under a
reasonableness standard, the court's focus is on whether "the committee
informs itself of the facts and is consistent in its treatment of community
members," as opposed to focusing on whether the court agrees with the
"aesthetic judgmenr of the association's decision. Id.
            With respect to this reasonableness test, we find the Appellate
Court of Connecticut's decision in Grovenburg v. Rustle Meadow Associates,
LLC, 165 A.3d 193 (Conn. App. Ct. 2017), to be particularly instructive. The
Grovenburg court discussed, in detail, the factors trial courts should balance
to determine whether an association's exercise of its design-control
authority is reasonable. Specifically, it suggested courts should consider
the following factors:
            the rationales proffered by the association for its
            exercise of discretionary authority; the specific
            nature of the activity proposed by the plaintiffs; the
            relationship between any legitimate interests of the
            association and its exercise of discretionary
            authority; the purposes of the association and the
            general plan of development for the common
            interest community, as reflected in its governing
            instruments; and the extent to which discretionary
            authority was exercised in good faith or in an
            arbitrary manner.
Id. at 233. We believe these factors are well suited for the type of analysis
a court should conduct when evaluating the reasonableness of design-
control restrictions. While this case is distinguishable from Grovenburg in

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                        that Morettes challenge arises from the adoption of the Architectural
                        Guidelines themselves, rather than a specific decision under them, the court
                        can look to these factors, to the extent they apply to the circumstances here
                        presented, in evaluating the reasonableness thereof. The district court
                        must also consider the extent to which the new rules depart from the
                        preexisting community design standards in Elk Point and whether the
                        restrictions imposed are consistent with similarly situated communities.
                        See, e.g., Restatement (Third) of Prop.: Servitudes § 6.9 ills. 8 & 9
                        (illustrating how natural or technological changes may render prior
                        architectural guidelines impractical or unwarranted justifying changes to
                        an association's guidelines); see also Kies v. Hollub, 450 So. 2d 251, 256 (Fla.
                        Dist. Ct. App. 1984) (considering whether a landowner's development of his
                        property was consistent with properties in similarly situated communities).
                        To the extent these guidelines do impose a change in applicable standards,
                        the court must weigh the "strength of the reasons supporting the change
                        against the fairness claims of the property owners who will be harmed by
                        the change." Restatement (Third) of Prop.: Servitudes § 6.9 cmt. d. These
                        factors are to be considered on a case-by-case basis and are highly
                        dependent on the underlying facts. Id.
                                    Reviewing the district court's order and the record on appeal,
                        we conclude that the parties did not present sufficient evidence for the
                        district court to evahiate the reasonableness of the restrictions or for us to
                        do so on appeal. Consequently, we remand to the district court to consider
                        this issue. On remand, the parties should address, and the district court
                        should consider, whether (1) the Architectural Guidelines themselves are
                        reasonable and (2) to the extent the restrictions regarding the design of
                        individually owned property changed as a result of the new rules in

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                     comparison to the prior plan approval process, to what extent that change
                     is justified and reasonable, consistent with section 6.9 and the factors
                     outlined above. The burden will be on Moretto to make a prima facie
                     showing that the Architectural Guidelines are unreasonable. See generally
                     Restatement (Third) of Prop.: Servitudes § 6.9 cmt. d (stating an
                     association's member has the burden of showing rules adopted under an
                     express design-control power are unreasonable, and upon a prima facie
                     showing, the burden shifts to the association to prove that the rules are fair
                     and reasonable). Therefore, if Moretto makes a -satisfactory showing, the
                     burden will shift to EPCC to establish that the rules are both fair and
                     reasonable under all the circumstances. Id.
                     Moretto's other arguments
                                 Moretto's complaint asserted four other claims for relief in
                     addition to his claim for declaratory relief, including a claim that the
                     Architectural Guidelines constitute a violation of his property rights. Other
                     than the declaratory relief claim, Moretto's appeal challenges only the
                     district court's dismissal of his violation of property rights claim as
                     noncognizable. We disagree with the district court's conclusion that
                     Moretto's claim is noncognizable. Courts are to analyze claims according to
                     their substance regardless of their label. Otak Nev., LLC v. Eighth Judicial
                     Dist. Court, 129 Nev. 799, 809, 312 P.3d 491, 498 (2013). Based on the
                     foregoing, to the extent EPCC's Architectural Guidelines are determined
                     unreasonable and thus beyond EPCC's authority, such restrictions would
                     be a violation of Moretto's rights as an owner in the community and
                     potentially would warrant relief if proven. Therefore, we reverse the
                     district coures summary judgment with respect to this claim. We otherwise
                     affirm the district coures summary judgment with respect to Moretto's

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                              CONCLUSION
             We expressly adopt sections 6.7 and 6.9 of the Restatement
(Third) of Property: Servitudes. We conclude that, under the Restatement's
approach, EPCC's bylaws provide it the express power to adopt design-
control restrictions on individually owned property in the Elk Point
cornmunity. Although EPCC possesses the authority to adopt design-
control restrictions for individually owned property, it must exercise that
power reasonably. Here, the parties did not address this issue below. Thus,
we reverse the district court's order granting summary judgment in favor of
EPCC with respect to Moretto's declaratory relief claim and violation-of-
property-rights claim, and we remand for consideration of whether the
Architectural Guidelines are reasonable in light of the discussion herein.
                                                 •

                                    Cadish

We concur:

                               J.
Silver

         Piekuury              J.
Pickering

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