Court Opinion

ID: 5136853
Source: CourtListenerOpinion
Date Created: 2021-12-20 23:18:55.214681+00
Date Added: 2024-06-11T08:23:58.856864
License: Public Domain

2021 UT App 9

               THE UTAH COURT OF APPEALS

RUSSELL WALKER, DENISE WALKER, BRYAN THOMAS, KAY THOMAS,
   TYLER HILTON, HEATHER HILTON, BRET BULLOCK, CAMILLE
  BULLOCK, DIANE L’ETOILE, ERIK NOLTE, JOSEPH MUSCOLINO,
  KAREN MUSCOLINO, STEVEN WALTERS, AND DAWN WALTERS,
                        Appellants,
                            v.
     ZEUS LAND HOLDINGS LLC, JUPITER LAND 1 LLC, AND
                TITAN LAND HOLDINGS LLC,
                        Appellees.

                            Opinion
                        No. 20190962-CA
                     Filed February 4, 2021

           Third District Court, Salt Lake Department
               The Honorable James D. Gardner
                          No. 180903319

            Russell S. Walker, Attorney for Appellants
      E. Barney Gesas, Richard D. Burbidge, and Carolyn J.
                LeDuc, Attorneys for Appellees

    JUDGE RYAN M. HARRIS authored this Opinion, in which
    JUDGES JILL M. POHLMAN and DIANA HAGEN concurred.

HARRIS, Judge:

¶1     Over opposition from many of its neighbors, a lot owner
subdivided its lot into two smaller lots. After the lot owner
completed its subdivision, some of the neighbors (Neighbors)
sued, claiming that the subdivision violated restrictive covenants
applicable to the property. The district court entered summary
judgment in favor of the lot owner, determining that the
subdivision did not violate the restrictive covenants. We affirm.
                   Walker v. Zeus Land Holdings

                        BACKGROUND

¶2     In 2017, Zeus Land Holdings LLC (Zeus) acquired a lot in
a subdivision (the Subdivision) located in Salt Lake County,
Utah, and just weeks later conveyed that lot to Jupiter Land 1
LLC (Jupiter). 1 Since the Subdivision’s inception, its lots have
been subject to a set of restrictive covenants (the CC&Rs). The
original version of the CC&Rs, recorded in 1940, limited each lot
to “one detached single family dwelling” and mandated that
“[n]o lot shall be resubdivided to contain less than 20,000 square
feet.” The CC&Rs were to “run with the land” and “be binding
on all” lot owners in the Subdivision “until January 1, 1965, at
which time [the CC&Rs would] be automatically extended for
successive periods of ten years unless by a vote of the majority of
the then owners of the lots it [was] agreed to change [the
CC&Rs] in whole or in part.”

¶3      As relevant here, the lot owners of the Subdivision twice
amended the CC&Rs. In 1964, the provision restricting further
subdivision of lots was amended to reduce the minimum
resubdivided lot size from 20,000 to 9,000 square feet. Then in
1978, the lot owners again lowered the minimum resubdivided
lot size, this time lowering the limit to 8,000 square feet.
Following those amendments, some of the lots in the
Subdivision were resubdivided into lots smaller than 20,000
square feet. 2 The 1978 amendment of the lot size provision was
in effect at the time Jupiter acquired its lot in 2017.

1. Zeus and Jupiter are entities controlled by Lane Halversen.

2. Indeed, several of the Neighbors, including Russell Walker
and his wife, currently possess lots in the Subdivision smaller
than 20,000 square feet.

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                  Walker v. Zeus Land Holdings

¶4     Soon after acquiring its lot, Jupiter sought permission
from local land use authorities to subdivide the lot into two
smaller lots—the first measuring 8,075 square feet and the
second measuring 13,655 square feet. Jupiter’s effort—despite
being facially compliant with the 1978 amendment to the
CC&Rs—drew vocal opposition from many of the other lot
owners in the Subdivision. One of those lot owners, Russell
Walker, sent letters in May and June 2017 to Jupiter and Lane
Halversen, purporting to “notify” them of the CC&Rs governing
the use of Jupiter’s property. The letters quoted the 1940 version
of the CC&Rs, took the position that lots could not be
resubdivided into parcels smaller than 20,000 square feet, and
requested that Jupiter “comply with the restrictive covenants
and not attempt to subdivide or build another structure” besides
the existing single-family home on the lot.

¶5     In July 2017, some of the lot owners met to discuss their
opposition to Jupiter’s subdivision efforts, and several of them
signed a paper expressing that opposition. 3 At the top of the
paper appear the words “PLEASE DO NOT SUBDIVIDE
[JUPITER’S LOT].” Below that statement appear several
signatures, addresses, and phone numbers. The paper does not
include any additional substantive text and, on its face, does not
purport to amend the CC&Rs.

¶6      Neither Walker’s letters nor the signed paper dissuaded
Jupiter from its subdivision efforts, and some weeks later, in the
fall of 2017, Jupiter obtained final approval from local land use

3. The paper is undated. In Neighbors’ brief, they appear to
assert that the paper was signed in May 2017. But in a sworn
affidavit, Russell Walker appears to aver that the paper was
signed in July 2017. We presume, for purposes of the narrative,
that the paper was signed in July 2017, but whether it was signed
in May or July is ultimately immaterial to our analysis.

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                   Walker v. Zeus Land Holdings

authorities for its requested subdivision. Thereafter, Jupiter
conveyed one of the two newly subdivided parcels to Titan Land
Holdings LLC (Titan), another entity controlled by Halversen.
For ease of reference, from this point forward we refer to Zeus,
Jupiter, Titan, and Halversen collectively as “Owner.”

¶7       A few months later, Neighbors—some of the owners of
lots in the Subdivision, whose names are listed above, in the
caption—filed suit against Owner, asserting claims for breach of
restrictive covenants and for injunctive and declaratory relief. In
connection with their complaint, Neighbors filed a notice of lis
pendens against the newly subdivided lots. In their complaint,
Neighbors cited the 1940 version of the CC&Rs, and alleged that
Owner’s resubdivision violated those CC&Rs because its new
lots were each smaller than 20,000 square feet. Owner responded
by filing a counterclaim, asserting claims for quiet title, slander
of title, and intentional interference with business relations.

¶8     Owner also filed a motion asking the district court to
either release the lis pendens or, in the alternative, at least
require Neighbors to post a bond. The court agreed with the
alternative approach and ordered Neighbors to post a $65,000
bond to maintain the lis pendens. Neighbors opted to release the
lis pendens rather than post the bond.

¶9     Both sides soon filed opposing motions for summary
judgment. In its motion, Owner sought summary dismissal of
all of Neighbors’ claims; in support of that motion, Owner
cited the 1964 and 1978 amendments to the CC&Rs, and
asserted that its resubdivision complied with the operative
covenants. In their motion, Neighbors sought judgment in
their favor on all their affirmative claims; in support of
that motion, Neighbors continued to rely on the 1940 version
of the CC&Rs, and asserted that Owner’s resubdivision
violated those covenants because the two new lots were
smaller than 20,000 square feet. In addition, Neighbors

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                  Walker v. Zeus Land Holdings

argued that the July 2017 paper signed by several lot owners
constituted an agreement “to reaffirm” the lot size restriction
contained in the 1940 CC&Rs. The district court scheduled oral
argument on the cross-motions for July 9, 2019.

¶10 On July 8, 2019, the day before the scheduled
oral argument, eleven of the fifteen owners of lots in the
Subdivision met and signed a document captioned
“Amendment Amending and Reaffirming Restrictive Covenants
in [the Subdivision].” The document purported to amend the lot
size restriction in the CC&Rs as follows: “No lot shall be
resubdivided to contain less than 20,000 square feet except as
otherwise platted before March, 1982.” The signatures on the
document were not notarized, and the record contains no
evidence that the document was ever recorded. Neighbors
lodged the document with the district court on the day it was
signed.

¶11 After full briefing and oral argument, the district court
granted Owner’s motion and denied Neighbors’ motion. The
court determined that the 1964 and 1978 amendments were
dispositive, and that Owner’s resubdivision was in compliance
with the operative language of the CC&Rs, as amended. The
court rejected Neighbors’ argument regarding the 2017 paper,
stating that the document was

      simply a sheet of paper with a list of names (some
      signed, others printed) that states tersely at the top
      “PLEASE DO NOT SUBDIVIDE [OWNER’S
      LOT].” The document contains no formalities, the
      signatures are not notarized, and the document
      was never recorded. Even more fundamental, the
      document does not even purport to amend the
      existing covenants or place any restrictions on
      [Owner’s] property. At most, the document is a
      polite request not to subdivide [Owner’s lot]. In the

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                   Walker v. Zeus Land Holdings

       [c]ourt’s view, the July 2017 “vote” is insufficient
       as a matter of law to override the 1964 and 1978
       Amendments and to breathe new life into the
       original lot size restriction.

And because the July 2019 document purporting to amend the
CC&Rs was lodged with the court on the day before oral
argument, after briefing was complete, the district court
“decline[d] to consider it.” During oral argument, Owner agreed
to voluntarily dismiss its counterclaims in the event that it
prevailed on its summary judgment motion. On August 7, 2019,
based on its summary judgment ruling and Owner’s stipulation,
the court entered final judgment in Owner’s favor and against
Neighbors on Neighbors’ affirmative claims, and dismissed
Owner’s counterclaims without prejudice.

¶12 A few weeks later, Neighbors filed a motion to alter or set
aside the judgment. In that motion, Neighbors asserted that their
“notice to [Owner] of their opposition to the subdivision made
[Owner] subject to” a 20,000-square-foot lot size restriction. In
support of their contention, Neighbors cited Mouty v. Sandy City
Recorder, 2005 UT 41, 122 P.3d 521. In a written ruling, the district
court addressed and rejected Neighbors’ argument on its merits,
and on that basis denied the motion.

            ISSUES AND STANDARDS OF REVIEW

¶13 Neighbors now appeal, and ask us to consider three
issues. First, Neighbors argue that the district court erred in
granting summary judgment to Owner on Neighbors’
affirmative claims. “[W]e review a district court’s grant of
summary judgment for correctness, affording no deference to the
court’s legal conclusions.” Poulsen v. Farmers Ins. Exch., 2016 UT
App 170, ¶ 8, 382 P.3d 1058. Second, and relatedly, Neighbors
argue that the court erred in denying their motion to alter or set

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                   Walker v. Zeus Land Holdings

aside the summary judgment order. “A [district] court’s decision
to grant or deny a motion for a new trial is reviewed for an
abuse of discretion. However, if the court’s ruling is based upon
a conclusion of law, we review the decision for correctness.”
Mardesich v. Sun Hill Homes LC, 2017 UT App 33, ¶ 11, 392 P.3d
950 (quotation simplified). Lastly, Neighbors assert that the court
erred in ordering the lis pendens released unless Neighbors
posted a bond. We review the court’s interpretation and
application of the lis pendens statutes for correctness. Meritage
Cos. v. Gross, 2017 UT App 223, ¶ 4, 409 P.3d 111.

                           ANALYSIS

¶14 In entering summary judgment in favor of Owner, the
district court determined that Owner’s resubdivision complied
with the CC&Rs, as amended. Neighbors challenge that
determination on appeal, and assert that Owner violated the
CC&Rs when it resubdivided its lot into two lots that are both
smaller than 20,000 square feet but larger than 8,000 square feet.
No party to this case contests the fact that the CC&Rs—
whichever version applies—run with the land and are binding
on those who own lots within the Subdivision. See Stern v.
Metropolitan Water Dist. of Salt Lake & Sandy, 2012 UT 16, ¶ 40,
274 P.3d 935 (noting that restrictive covenants are deemed to run
with the land if four requirements are met, and that such
covenants bind successive owners of the encumbered property).
The dispute between the parties here turns on which version of
the CC&Rs were in effect when Owner’s lot was resubdivided,
because the different versions of the CC&Rs vary regarding the
allowable minimum lot size.

¶15 When the CC&Rs were initially recorded in 1940, they
prohibited resubdividing lots to “less than 20,000 square feet.”
But as noted, the CC&Rs were amended in 1964 and 1978. The
1964 amendment lowered the minimum resubdivided lot size

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                   Walker v. Zeus Land Holdings

from 20,000 square feet to 9,000 square feet. The 1978
amendment again lowered the minimum lot size, this time to
8,000 square feet. The parties do not dispute the validity of the
1964 and 1978 amendments. 4

¶16 Owner acquired its lot in 2017, and completed the
resubdivision process later that same year. At that time, the 1978
amendment had been in effect for nearly four decades, and
because both of Owner’s resubdivided lots were larger than
8,000 square feet, the version of the CC&Rs in effect in 2017 5
clearly permitted Owner’s resubdivision.

4. As the district court noted, there is an argument to be made
that both the 1964 and the 1978 amendments are invalid, for
reasons discussed by our supreme court in Swenson v. Erickson
(Swenson I), 2000 UT 16, 998 P.2d 807. In Swenson I, the court
interpreted nearly identical CC&Rs as allowing amendments
“only at such time as the covenants are due for extension,” id.
¶¶ 33–34, and in a later appeal in that same case, the court
clarified that, in Swenson I, it had expressed “the view” that “the
property owners had twenty-four hours available to them every
ten years to conduct the business associated with modifying or
terminating” the CC&Rs, Swenson v. Erickson (Swenson II), 2007
UT 76, ¶ 11, 171 P.3d 423. But in this case, no party is asserting
that the amendments to the CC&Rs are invalid for the reasons
set forth in the Swenson cases, and because no party raises the
argument, we do not address it. Therefore, like the parties, we
presume for the purposes of our analysis that the 1964 and 1978
amendments were validly enacted.

5. We acknowledge that in 2019, on the day before the summary
judgment hearing, eleven lot owners in the Subdivision signed a
document purporting to amend the CC&Rs to restore the 20,000-
square-foot subdivision restriction, at least for lots platted after
                                                     (continued…)

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                   Walker v. Zeus Land Holdings

¶17 Neighbors resist this conclusion, however, and do so by
advancing two arguments. First, they argue that the 2017
paper—created before Owner’s subdivision was complete—
represents a “vote” by a majority of the subdivision owners “to
amend again or reaffirm the original [1940] Restrictive
Covenants,” including the 20,000-square-foot subdivision
restriction. We find this argument unpersuasive. On its face, the
paper does not purport to amend the CC&Rs in any way, and
does not so much as mention the specific square-foot restrictions
applicable to resubdivision of lots. We agree with the district
court’s assessment of the 2017 paper, in which the court stated
that, “[a]t most, the document is a polite request not to subdivide
[Owner’s lot].” And we reject Neighbors’ argument that the
document constituted a “vote” or a “reaffirmation” of the pre-
1964 subdivision lot size requirement.

¶18 Perhaps recognizing the 2017 paper’s shortcomings,
Neighbors cite Utah’s “race-notice” recording statute, see Utah

(…continued)
March 1982. The district court refused to consider this document
as part of its analysis due to the fact that it was submitted after
summary judgment briefing was complete, and Neighbors do
not challenge that decision on appeal. For this reason alone, we
have no reason to—and do not—consider the document either.
But even if we could consider this document, we have our
doubts about whether it would have made a difference to the
outcome of this case, given the fact that Owner had completed
its resubdivision some two years earlier. See East Sevier County
Utility Dist. v. Wachovia Bank & Trust Co., 570 S.W.2d 850, 853
(Tenn. 1978) (“[N]o set of covenants should be given any general
retroactive effect.”); see also State v. Clark, 2011 UT 23, ¶ 13, 251
P.3d 829 (“[W]e apply the law as it exists at the time of the event
regulated by the law in question.”).

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                   Walker v. Zeus Land Holdings

Code Ann. § 57-3-101 (LexisNexis Supp. 2020), and assert that
the paper—along with the letters sent by Russell Walker—“gave
notice” to Owner of substantial neighborhood opposition to
Owner’s subdivision plans. But Neighbors provide no support—
in statute, case law, or otherwise—for the proposition that notice
of mere neighborhood opposition can serve as a method of
legally halting a landowner’s actions. We agree with Owner’s
assertion, in its brief, that a landowner’s knowledge that its
neighbors oppose its actions, or that they “may even decide to
amend the applicable covenants at some unknown time in the
future,” does not qualify as “‘actual notice’ of a legally-cognizable
prior interest in real property.”

¶19 Second, Neighbors direct our attention to Mouty v. Sandy
City Recorder, 2005 UT 41, 122 P.3d 521, and contend that even if
the governing CC&Rs allowed for resubdivided lots measuring
8,000 square feet or more, it was unreasonable for Owner to rely
on them given Owner’s awareness of Neighbors’ stated
opposition. We find this argument similarly unpersuasive.

¶20 In Mouty, a landowner asked the city to amend a zoning
ordinance to permit a proposed development. Id. ¶ 4. The
proposed amendment drew immediate community opposition
but, despite that opposition, the city after public hearings
amended the ordinance as requested by the landowner. Id. ¶ 5.
About a week later, citizens who had opposed the amendment
submitted an application for a referendum petition, hoping to
obtain sufficient signatures to subject the newly amended
ordinance to a popular referendum vote. Id. ¶ 6. Eventually, the
city determined that insufficient signatures had been gathered,
and refused to put the matter on the municipal ballot. Id. ¶¶ 7–8.
The citizens sued, and the landowner defended the case, in part,
by asserting that “zoning estoppel” barred the citizens’ claim. Id.
¶ 13. Under that concept, “an applicant is entitled to a building
permit or subdivision approval if [the] proposed development
meets the zoning requirements in existence at the time of [the]

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                    Walker v. Zeus Land Holdings

application and if [the applicant] proceeds with reasonable
diligence, absent a compelling, countervailing public interest.”
Id. (quotation simplified). Our supreme court rejected the
landowner’s invocation of principles of zoning estoppel, on the
facts of that case, in part because a state constitutional provision
provides that “the residents of a municipality have the right to
‘require any law or ordinance passed by the law making body of
the county, city, or town to be submitted to the voters thereof, as
provided by statute, before the law or ordinance may take effect.’” Id.
¶ 14 (quoting Utah Const. art. VI, § 1(2)(b)(ii)). As the court put
it, “article VI prevents referable laws from taking effect until
local voters have had the opportunity to exercise their right to
seek a referendum.” Id. For this reason, the court concluded that
principles of zoning estoppel were inapplicable. Id. ¶ 15.

¶21 Neighbors claim Mouty stands for the proposition that
“an applicant for development of property [is] not entitled to
rely on zoning ordinances or Restrictive Covenants in effect at
the time of the application if ‘proceedings to amend (those)
zoning ordinances are underway’” (quoting Mouty, 2005 UT 41,
¶ 13), and argue therefrom that, because Neighbors stated their
opposition to Owner’s resubdivision before it was approved,
Owner is not entitled to rely on the 1978 amendment to the
CC&Rs. We are unpersuaded, for two reasons.

¶22 First, and most substantively, the landowner in Mouty
was not permitted to rely on a recently amended ordinance
because, under the terms of the Utah Constitution, the ordinance
was not deemed effective “until local voters have had the
opportunity to exercise their right to seek a referendum.” See id.
¶ 14. In this case, by contrast, the version of the CC&Rs upon
which Owner relies had been in effect for nearly four decades.
Because CC&Rs are treated as contracts, they are binding once it
is clear the “parties reached agreement on complete and definite
terms.” See Nunley v. Westates Casing Services, Inc., 1999 UT 100,
¶ 22, 989 P.2d 1077. In fact, one of the purposes behind

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                   Walker v. Zeus Land Holdings

enforcement of CC&Rs as binding on all subdivision lot owners
is “to give the owners of lots within such an area some degree of
certainty as to future development.” See Smith v. Simas, 2014 UT
App 78, ¶ 14, 324 P.3d 667. As noted, Neighbors do not contend
on appeal that the 1978 amendment was invalid. Thus, unlike
Mouty, where the ordinance upon which reliance was sought
had not yet taken full effect, in this case the contractual provision
upon which Owner relies was unquestionably in effect, and
Neighbors’ stated opposition to Owner’s subdivision plans was
without legal significance.

¶23 Second, and relatedly, the outcome of the Mouty decision
had nothing to do with the degree of public clamor or opposition
to the amended ordinance, or even with the landowner’s
awareness of the public opposition; instead, it turned on the
“compelling, countervailing public interest,” rooted in our state
constitution, in giving the public a chance to voice their
disapproval of municipal legislation. See 2005 UT 41, ¶ 15. And
this makes sense from a policy standpoint. If mere stated
opposition to a neighbor’s development were enough to legally
stop the development, property owners could be held hostage to
any of their neighbors’ demands, and prevented from making
changes to their property simply because opposing neighbors
registered loud opposition. Moreover, such a rule would be
difficult to administer, and would raise intractable questions
about what level of stated public opposition—a neighborly visit,
a demand letter, a lawsuit, a recorded document clouding title—
would be sufficient to halt a project. Our system of property
rights, including the details of what a landowner is permitted to
do with its property, is dependent on the laws, ordinances, and
contractual provisions in effect at the time the landowner’s
action takes place, and not at all dependent—at least not
legally—on the level of neighborhood or public opposition.

¶24 In sum, the 1978 amendment—lowering the minimum
resubdivided lot size to 8,000 square feet—was operative at the

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                  Walker v. Zeus Land Holdings

time Owner resubdivided its lot. Accordingly, Owner’s actions
were entirely consistent with the applicable CC&Rs, and neither
the 2017 paper nor Mouty changes that analysis.

¶25 And for similar reasons, the district court did not err by
ordering the lis pendens released if Neighbors did not post a
bond. A lis pendens is subject to release if “the court finds that
the claimant has not established . . . the validity of the real
property claim that is the subject of the notice.” Utah Code Ann.
§ 78B-6-1304(2)(b) (LexisNexis 2018). Given that there exists no
valid basis for Neighbors’ objections to Owner’s resubdivision
under the governing CC&Rs, release of the lis pendens was
warranted. See id.

                         CONCLUSION

¶26 The district court did not err in granting summary
judgment in favor of Owner on Neighbors’ affirmative claims,
denying Neighbors’ post-judgment motion, or ordering the lis
pendens released unless Neighbors posted a bond.

¶27   Affirmed.

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