Court Opinion

ID: 9961692
Source: CourtListenerOpinion
Date Created: 2024-04-19 15:18:38.482106+00
Date Added: 2024-06-11T08:21:20.780732
License: Public Domain

IN THE SUPREME COURT, STATE OF WYOMING

                                             2024 WY 41

                                                                     APRIL TERM, A.D. 2024

                                                                             April 19, 2024

  SHARON ANN KOCH,

  Appellant
  (Plaintiff),

  v.                                                                 S-23-0246

  MELISSA R. GRAY,

  Appellee
  (Defendant).

                       Appeal from the District Court of Albany County
                          The Honorable Misha E. Westby, Judge

Representing Appellant:
      Frank J. Jones, Attorney at Law, Wheatland, Wyoming.

Representing Appellee:
      Melissa R. Gray, pro se.

Before FOX, C.J., and KAUTZ,* BOOMGAARDEN, GRAY, and FENN, JJ.
* Justice Kautz retired from judicial office effective March 26, 2024, and, pursuant to Article 5, § 5 of the
Wyoming Constitution and Wyo. Stat. Ann. § 5-1-106(f) (LexisNexis 2023), he was reassigned to act on
this matter on March 27, 2024.

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
any typographical or other formal errors so that correction may be made before final publication in the
permanent volume.
GRAY, Justice.

[¶1] Rocky Mountain Timberlands, Inc. (RMT), the developer of the Buffalo Trail Ranch
subdivision, members of the subdivision, including Sharon Ann Koch, and others, sued
Melissa R. Gray claiming she violated the subdivision’s restrictive covenants. After a
bench trial, the district court applied the contractual “first to breach” doctrine and dismissed
all the claims against Ms. Gray. 1 Ms. Koch contends that the district court erred as a matter
of law when it applied the “first to breach” doctrine to her claim because she has no
contractual relationship with Ms. Gray. We agree, reverse, and remand.

                                                ISSUE

[¶2] Did the district court err when it applied a contract doctrine, “first to breach,” to Ms.
Koch’s breach of covenant claim? 2

                                                FACTS

[¶3] RMT developed the Buffalo Trail Ranch subdivision in Albany County and in 2008,
filed a Declaration of Covenants (covenants) governing the subdivision. Ms. Koch owns
a tract in the subdivision. Ms. Gray is purchasing a tract (the subject property) from RMT
pursuant to a Contract for Deed. The only parties to the Contract for Deed are RMT and
Ms. Gray. The terms of the Contract for Deed require Ms. Gray to follow the covenants
and provide that a violation of the covenants was grounds for default of the contract.

[¶4] The covenants prohibit property owners from placing garbage, junk, scrap materials,
inoperative motor vehicles, and mobile homes on their property. The covenants also
provide that property owners may file suit to enforce the covenants and may seek recovery
of fees and costs.

[¶5] This matter began in April 2022, when RMT, Ms. Koch, and others (the Plaintiffs)
filed suit against Ms. Gray and others (the Defendants). After the district court dismissed
a number of the Plaintiffs and Defendants, the remaining parties were Plaintiffs—RMT,
Jason Gabriel Douglas, Zacky Dean Koch, and Sharon Ann Koch (the Appellant here)—
and Defendant Melissa R. Gray (the Appellee here).

[¶6] The Plaintiffs alleged that “[Ms. Gray has] placed garbage, junk, scrap materials,
inoperative motor vehicles, trash, mobile homes and similar items” on the subject property
and that in doing so she “violated the terms of the Declaration of Covenants” and is “in
default under the terms of the Contract for Deed.” The Plaintiffs asserted five causes of

1
 Ms. Gray made several counterclaims which were also dismissed and are not on appeal.
2
 In her pro se brief, Ms. Gray raises other issues. Ms. Gray did not appeal; those issues are not properly
before the Court and we do not address them.

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action. The Complaint sets forth separate causes of action but does not distinguish between
claims made by RMT or the other plaintiffs.

[¶7] The first cause of action sought a declaratory judgment pursuant to Wyo. Stat. Ann.
§ 1-37-102 “that the Defendants have breached the clear and unambiguous terms of the
Contract for Deed and Declaration of Covenants.” The remaining causes of action were
for breach of the Contract for Deed, ejectment, nuisance, and attorney fees. Ms. Gray filed
counterclaims including claims for malicious abuse of process, the “tort of intrusion,”
nuisance, “intentional infliction of mental anguish,” the “tort of disability aggravation,”
and “disability harassment.” She also asserted that she was not the first to breach the
covenants because the covenants contemplated the formation of a road maintenance
association which had never been formed.

[¶8] After a bench trial, the district court made an oral ruling. The district court addressed
the assertion that Ms. Gray’s violation of the covenants breached her Contract for Deed,
stating:

                    The Court begins its analysis of this case with an
              examination of the First to Breach Rule[.]

                                         .    .    .

                     Mr. Joiner [RMT] admitted that the [road maintenance]
              association was never formed in violation of the covenants and
              the contract for deed by reference.

                                         .    .    .

                     So what’s been brought before this Court is a
              declaration of covenants that the Plaintiff has admitted it is in
              breach of a portion of and then asks the Court to enforce
              another portion of the covenants on the Defendant.

                                         .    .    .

              [O]ne party’s material breach may excuse the other party’s
              performance under that agreement. The party asserting the
              affirmative defense bears the burden of proof to establish the
              first to breach affirmative defense.

                                         .    .    .

                                              2
              [I]n this case Ms. Gray and Mr. Joiner established that the
              [requirement to create the road maintenance] association was
              part of the contract; that Mr. Joiner breached that portion of the
              contract and that the formation of the association was material
              not only because of the significance of road maintenance in this
              area, subdivision, but also to reaching the parcel at issue[.]

                                         .     .    .

                     As to the request for declaratory judgment, breach of
              contract, ejectment and attorney’s fees, the Court finds in favor
              of the Defendant based on the first to breach rule.

                     The Court notes that the Plaintiff – that the Plaintiffs are
              trying to enforce a provision of the covenants at the same time
              that they are – that they are admitting that they are not
              complying with the terms of [RMT’s] own document and
              therefore, the Court finds it appropriate to find in favor of the
              Defendants as to those claims which all stem from the contract.

The district court recognized that those Plaintiffs who owned property in the subdivision
separately sought to enforce the covenants. It denied their claims reasoning, “It would be
impossible for the Court to hold [Ms. Gray] to the covenants when those covenants were
breached prior to [Ms. Gray’s] breach of the covenants.” The court went on to analyze the
nuisance claim and concluded that “the Court finds it impossible to make a determination
. . . that the Defendant’s use of the property is unreasonable, unwarranted or unlawful as
set forth in the case law. And so finds for the Defendant on the last claim of nuisance as
well.” The district court entered a judgment denying all parties’ claims. Some of the
plaintiffs filed a motion to alter or amend the judgment, which was denied.

[¶9] The trial was unrecorded, and transcripts are unavailable. Ms. Koch procured a
W.R.A.P. 3.03 statement of the evidence which refers to only one fact: “there was no
evidence established at trial that there was an agreement or contract between Ms. Koch and
Ms. Gray.” Only Ms. Koch appeals, and her appeal is timely.

                                STANDARD OF REVIEW

[¶10] After a bench trial, we review a district court’s conclusions of law de novo. Testolin
v. Thirty-One Bar Ranch Co., 2024 WY 6, ¶ 15, 541 P.3d 455, 460 (Wyo. 2024); Elec.
Wholesale Supply Co. v. Fraser, 2015 WY 105, ¶ 14, 356 P.3d 254, 258–59 (Wyo. 2015).

              The factual findings of a judge are not entitled to the limited
              review afforded a jury verdict. While the findings are

                                              3
                presumptively correct, the appellate court may examine all of
                the properly admissible evidence in the record. Due regard is
                given to the opportunity of the trial judge to assess the
                credibility of the witnesses, and our review does not entail re-
                weighing disputed evidence. Findings of fact will not be set
                aside unless they are clearly erroneous. A finding is clearly
                erroneous when, although there is evidence to support it, the
                reviewing court on the entire evidence is left with the definite
                and firm conviction that a mistake has been committed. In
                considering a trial court’s factual findings, we assume that the
                evidence of the prevailing party below is true and give that
                party every reasonable inference that can fairly and reasonably
                be drawn from it. We do not substitute ourselves for the trial
                court as a finder of facts; instead, we defer to those findings
                unless they are unsupported by the record or erroneous as a
                matter of law.

Testolin, ¶ 15, 541 P.3d at 460 (quoting Lyman v. Childs, 2023 WY 16, ¶ 10, 524 P.3d 744,
751 (Wyo. 2023)). “The ‘[i]nterpretation of covenants imposing restrictions or conditions
on the use of land is a matter of law for the courts.’” Wimer v. Cook, 2016 WY 29, ¶ 21,
369 P.3d 210, 218 (Wyo. 2016) (quoting Omohundro v. Sullivan, 2009 WY 38, ¶ 8, 202
P.3d 1077, 1081 (Wyo. 2009)). “Because it is a question of law, we review the covenants
de novo, without giving any deference to the district court’s determinations at the
conclusion of the trial.” Wimer, ¶ 21, 369 P.3d at 218 (citing Stevens v. Elk Run
Homeowners’ Ass’n, Inc., 2004 WY 63, ¶ 12, 90 P.3d 1162, 1166 (Wyo. 2004)). 3

                                             DISCUSSION

Did the district court err when it applied a contract doctrine, “first to breach,” to Ms.
Koch’s breach of covenant claim?

3
 Restrictive covenants are contractual in nature; this Court interprets them in accordance with the principles
of contract law. Wimer, ¶ 22, 369 P.3d at 218; Bedessem v. Cunningham, 2012 WY 36, ¶ 16, 272 P.3d 310,
313 (Wyo. 2012). “If the plain terms of the covenants are sufficiently clear, we interpret them without
reference to any attendant facts and circumstances or extrinsic evidence. We consider the document as a
whole and interpret any clause or paragraph in harmony with the other provisions.” Bedessem, ¶ 16, 272
P.3d at 313 (internal citations omitted). The Court’s goal is:
                 to determine and effectuate the intention of the parties, especially the
                 grantor or declarant. To do so, we examine all of the covenants, and not
                 just one clause or paragraph, and give the words their plain and ordinary
                 meaning. If the language in the covenants is clear and unambiguous, we
                 look only to the four corners of the document to determine the parties’
                 intent. A disagreement between the parties as to the meaning of covenants
                 does not give rise to an ambiguity.
Wimer, ¶ 22, 369 P.3d at 218 (internal citations and quotation marks omitted).

                                                      4
[¶11] Ms. Koch raises a single issue—whether her claim seeking a declaration that Ms.
Gray had breached the covenants was properly rejected based on the first to breach
doctrine. 4 We analyze Ms. Koch’s issue in two parts. First, we consider whether Ms. Koch
and Ms. Gray have a contractual relationship to which the first to breach defense could
apply. Next, because no contractual relationship exists, we consider whether the first to
breach defense applies to Ms. Koch’s claim that Ms. Gray breached the covenants.

[¶12] The basic premise of a first to breach affirmative defense is that “a party cannot claim
the benefit of a contract that it was the first to materially breach.” Maverick Benefit
Advisors, LLC v. Bostrom, 2016 WY 96, ¶¶ 14–15, 382 P.3d 753, 758 (Wyo. 2016) (citing
White v. Empire Exp., Inc., 395 S.W.3d 696, 715–16 (Tenn. Ct. App. 2012); Kinstler v.
RTB S. Greeley, Ltd. LLC, 2007 WY 98, ¶ 7, 160 P.3d 1125, 1127 (Wyo. 2007)). “The
party asserting the affirmative defense bears the burden of proof. To establish the first-to-
breach affirmative defense, the party asserting the defense must show that the other party
breached first and that the breach was material.” Maverick, ¶ 15, 382 P.3d at 758.

[¶13] This framework assumes a contract between the party asserting the first to breach
defense and the other party. According to the W.R.A.P. 3.03 statement of the facts, the
district court found “there was no evidence established at trial that there was an agreement
or contract between Ms. Koch and Ms. Gray.” 5 Because there was no contract between
Ms. Koch and Ms. Gray, Ms. Gray cannot establish the first to breach affirmative defense
against Ms. Koch.

[¶14] The corollary question is whether RMT’s failure to form a road maintenance
association in breach of the covenants precludes Ms. Koch’s claim that Ms. Gray breached
the covenants. The district court concluded that RMT breached the covenants when it
failed to form a road maintenance association, and this breach rendered the covenants
inapplicable to Ms. Gray. See supra ¶ 8 (“It would be impossible for the Court to hold the
Defendant to the covenants when those covenants were breached prior to her breach of the
covenants.”). The district court cited no authority, and we have found none, in support of
its conclusion that the contractual first to breach doctrine is applicable to the enforcement
of covenants by a third party. 6 The first to breach doctrine is not applicable to Ms. Koch’s

4
  In her pro se brief, Ms. Gray contends that Ms. Koch improperly “changed the nature of the case from
ejectment to covenant enforcement.” It is clear the Complaint included a claim for a declaration that Ms.
Gray breached the covenants.
5
  Ms. Gray argues that she does have a contract with Koch—an easement—which she contends Ms. Koch
violated. There is no easement in the record and it appears Ms. Gray did not make this argument below. It
is not possible for this Court to determine whether an easement exists, and, if it does, the parties to the
easement or any of its terms. We decline to consider the alleged easement here.
6
  We did find a single case, not involving a third a party, Kelly v. Timber Lakes, where the first to breach
doctrine was considered in the context of restrictive covenants. There, a property owner who failed to pay

                                                     5
claim seeking enforcement of covenants. The district court did not determine whether the
covenants have been abandoned by failure to enforce them and we do not consider that
question in this appeal. See Hammons v. Table Mountain Ranches Owners Ass’n, Inc.,
2003 WY 85, ¶ 14, 72 P.3d 1153, 1156 (Wyo. 2003); Moore v. Wolititch, 2015 WY 11,
¶ 12, 341 P.3d 421, 424 (Wyo. 2015).

                                            CONCLUSION

[¶15] The first to breach doctrine of contract law does not apply to Ms. Koch’s claim that
Ms. Gray breached the restrictive covenants. We reverse and remand for further
proceedings consistent with this opinion.

assessments required under the covenants argued that his failure was excused because the property owners’
association was the first to breach the contract when it failed to wait the required period of time before
foreclosing on the property. Kelly v. Timber Lakes Prop. Owners Ass’n, 2022 UT App 23, ¶ 60, 507 P.3d
357, 376. The Utah Court of Appeals rejected the landowner’s argument, concluding that it was the
landowner’s failure to pay assessments that occurred first and precipitated the foreclosure. Id. ¶ 62, 507
P.3d at 376. Kelly might be relevant to the district court’s conclusion that RMT was the first to breach, but
does not apply to the claims of other landowners in the subdivision.

                                                     6