Timber Lakes Property Owners Association v. Cowan, 2019 UT App 160 (injunctive relief/irreparable harm).

2019 UT App 160

Timber Lakes Property Owners Association, Appellant,
v.
Phillip E. Cowan, Gail M. Cowan, and the Cowan Family Trust, Appellees.

No. 20180125-CA.

Court of Appeals of Utah.
Filed September 26, 2019.

Appeal from Fourth District Court, Heber Department, The Honorable Jennifer A. Brown, No. 140500089.  David L. Barclay, Lincoln Harris, and Robert S. Rosing, Attorneys for Appellant.  Bruce R. Baird and P. Matthew Muir, Attorneys for Appellees.

JUDGE GREGORY K. ORME authored this Opinion, in which JUDGES MICHELE M. CHRISTIANSEN FORSTER and DIANA HAGEN concurred.

Opinion

ORME, Judge.

¶1 Timber Lakes Property Owners Association (the Association) initiated suit against Phillip E. Cowan, Gail M. Cowan, and The Cowan Family Trust (collectively, the Cowans) seeking injunctive relief requiring the Cowans to remove a detached garage they constructed on their property. After all was said and done, the Association won the battle but lost the war. The district court granted summary judgment in favor of the Association, determining that the garage violated the applicable Declaration of Protective Covenants, Conditions, Restrictions and Management Policies for Timber Lakes Estates (the CC&Rs). But despite concluding that a violation had occurred, the court declined to grant the permanent injunction the Association sought. In relevant part, the court determined that the Association "ha[d] not shown that an award of monetary damages would be insufficient to remedy the purported harm" and had therefore failed to establish irreparable harm—a prerequisite of injunctive relief. We hold that the district court did not abuse its discretion in so concluding. With respect to an ancillary issue, we also hold that Wasatch County did not assign its zoning ordinance enforcement rights to the Association.

BACKGROUND^[1]

¶2 The Association is the homeowners association that governs Timber Lakes Estates (Timber Lakes), located in Wasatch County. Timber Lakes encompasses eighteen subdivisions, one of which is Plat 12. Plat 12, in turn, is further subdivided into lots, including Lot 1275 (the Property). Pursuant to a recorded agreement entered into by Wasatch County (the County), the Association, and the developer of Timber Lakes (the Maintenance Agreement), "[t]he Association possesses a right of way . . . to provide all maintenance and improvements for roadways" in Timber Lakes. Within Plat 12 specifically, the Association possesses a right-of-way to maintain, improve, and use a 60-foot wide road (the Plat 12 Right-of-Way) that encroaches 30 feet into the western portion of the Property and 30 feet into the eastern portion of the lots located directly across from the Property. To date, the Association has not constructed a road on the Plat 12 Right-of-Way, and it has no plans to do so. In its stead, a separate road (the Existing Road) services the Property and neighboring lots. The Existing Road is not within the Plat 12 Right-of-Way.

¶3 Since their recordation in 1989, the CC&Rs have governed Timber Lakes. The Association has the right and duty under the Maintenance Agreement "to enforce all covenants, conditions, restrictions and management policies set forth in the [CC&Rs]," and the County reserved the right "to enter upon the premises of [Timber Lakes] for inspection and for enforcement of all applicable laws, ordinances, [CC&Rs] and agreements." Should the Association fail to meet its enforcement obligations, the Maintenance Agreement provides that "the County may . . . cause suit to be brought against the Association for the purpose of requiring it to enforce the same or may itself bring and prosecute a suit in the name of the Association for the purpose of enforcing the [CC&Rs]."

¶4 The CC&Rs require Timber Lakes property owners to submit detailed plans and specifications to, and receive written approval from, the Association before commencing construction of any structure on their property. The Association has the authority to disapprove any construction plans that "are not in accordance with all of the provisions of [the CC&Rs]." The CC&Rs further require the construction of any improvements to "comply with all requirements of the federal, state and local governing authorities," of which Wasatch County Code 16.09.09(1) (the County Setback Ordinance) is of particular relevance to the current case. It requires structures to "be a minimum of sixty (60) feet from the center of [a] road, or thirty (30) feet from the edge of [a] right-of-way, whichever is greater."

The Construction of the Garage

¶5 The Cowans purchased the Property in 2012 on behalf of their relatives, Peter and Beverley McDermott, who immediately took possession. The Cowans did so with assurances that the McDermotts would purchase the Property within the next three years.^[2] At the time of purchase, the Property contained a house but no garage. Upon purchase of the Property, the Cowans^[3] applied for and received a building permit from the County and commenced construction of a detached garage immediately southwest of the house. Contrary to the provisions of the CC&Rs, they did so without first seeking written approval from the Association.

¶6 On the day that excavation for the garage began, one of the Association's board members notified the Cowans that they were required to submit plans for the garage to the Association, which they immediately did. The next day, the board member returned to the Property accompanied by the Association's roads manager and informed the Cowans that there was a potential problem with the garage's location "due to the Association's plans to widen [the Existing Road] in the future." Actually, the garage's western wall was located within three feet of the eastern edge of the Plat 12 Right-of-Way in violation of the thirty-foot setback required by the County Setback Ordinance.^[4] As a result of that visit, construction of the garage ceased.

¶7 Following additional discussions, the Cowans met with three of the Association's board members in mid-October 2012 to discuss the garage. The representatives informed the Cowans that the Association would permit them to build the garage if they could obtain a letter from the County approving the garage's location. The three board members, according to the Cowans, also represented that they had the authority to approve the garage on the Association's behalf.

¶8 Within a week, the Cowans were successful in obtaining a letter from the County's planning department (the County Letter).^[5] The County Letter stated that the garage's location in relation to the Existing Road "met the requirements of the [County Setback Ordinance]," as evidenced by the permit the County had previously issued to the Cowans. But it continued that "[i]n the future if the road is widened the structure will be considered legally non-conforming meaning any new addition would be required to meet current setback requirements." Although the letter contemplated a widening of the Existing Road, it made no mention of the Plat 12 Right-of-Way and the garage's violation of the County Setback Ordinance in relation to it.^[6] One of the three board members with whom the Cowans had met in mid-October subsequently advised them that construction of the garage could resume.^[7]

¶9 In early November 2012, the Cowans received a letter from the Association's attorney informing them that "[t]he garage constitute[d] a continuing violation, nuisance and/or trespass" upon the Plat 12 Right-of-Way. The letter stated that "[a]lthough road widening or other adjustment within the right-of-way is not scheduled, there will come a time when such will occur." It further notified the Cowans that when such time came, they "may then need to remove, modify, or relocate the garage as a result of its continuing violation" or "may then be responsible for costs to [the Association] for steps necessary to protect the garage from vehicles or from run-off that would not have been necessary had [they] complied with the set-back requirement."^[8] Despite the Cowans' receipt of the November letter, construction of the garage was completed, and they did not receive any further negative communication from the Association regarding the garage until the Association initiated the current action almost a year and a half later, in 2014.

Procedural History

¶10 In its suit, the Association sought a permanent injunction against the Cowans ordering them to either "remove the Garage from the [Property] at their sole expense" or, in the alternative, "to relocate the Garage at their sole cost and expense" to a location on the Property that would be in compliance with the County Setback Ordinance. The Association did not request monetary damages in the alternative. Following a stipulated stay of proceedings, the Cowans filed their answer and counterclaim.

¶11 At the conclusion of discovery, the Association filed a motion for summary judgment. The district court granted the motion, indicating it would dismiss the Cowans' counterclaims and rule in favor of the Association on its claims. In granting the summary judgment motion the court, in relevant part, concluded that (1) the manner of construction and location of the garage violated the CC&Rs and the Maintenance Agreement;^[9] (2) "neither the Association nor any of said Board Members have, or did have at any time, the power or authority to authorize, excuse, or waive said Violations by agreement or otherwise or to make representations to the contrary"; and (3) because the Cowans had actual and/or constructive knowledge of the CC&Rs and the Maintenance Agreement at the time of purchase and when constructing the garage, they were not entitled to rely on the contrary statements and conduct of the Association's board members.

¶12 But despite granting the Association's summary judgment motion on its substantive claims, the district court declined to award the permanent injunction the Association sought. Following supplemental briefing and a hearing on the issue, the court concluded that although the Association had successfully established the second factor of the permanent injunction inquiry,^[10] "the remaining prongs are not quite as clear." The court first noted that the Association had not presented evidence of special damages. Referring to the required showing of irreparable harm, the court next stated that the Association "ha[s] not shown that an award of monetary damages would be insufficient to remedy the purported harm." Finally, the court determined that "a balancing of the equities does not weigh in favor of a permanent injunction." Specifically, although the Cowans had not fully complied with the provisions of the CC&Rs and the Maintenance Agreement when constructing the garage, "they did make efforts to do so." The court concluded that the Cowans "did not intentionally flaunt the applicable requirements," because "[t]hey engaged with the [Association] and the County in an attempt to understand what was required," but neither entity was "accurate or complete in their communications" with the Cowans. Additionally, the Association was not wholly without blame because it bore the responsibility of assuring compliance with the CC&Rs and the Maintenance Agreement, and the Association's board members "shouldn't be allowed to act in a manner inconsistent with governing covenants and restrictions and then bear no responsibility for the result." In light of this, the court concluded that requiring the Cowans to tear down their garage was "a harsh remedy that [was] not warranted under these facts and circumstances." The court entered its final judgment incorporating its rulings.

¶13 The Association appeals.

ISSUES AND STANDARDS OF REVIEW

¶14 The Association raises two primary issues on appeal that we address on the merits.^[11] First, it challenges the district court's denial of injunctive relief despite the court's conclusion that the garage's location violated the CC&Rs. This case is in a somewhat unusual posture as concerns the standard of review. The Association argues that we should apply the summary judgment standard of review (i.e., for correctness) because the court's denial of injunctive relief was a determination made in response to a motion for summary judgment and the supplemental briefing ordered by the court. But a court's ultimate decision to grant or deny injunctive relief—including the determination whether a plaintiff suffered irreparable harm—is ordinarily reviewed for an abuse of discretion. See Osguthorpe v. ASC Utah, Inc., 2015 UT 89, ¶¶ 37-38, 365 P.3d 1201. Although the district court combined its summary judgment and injunction rulings in a single order, we view the court's grant of the Association's summary judgment motion and the court's subsequent denial of a permanent injunction as two separate rulings.^[12]

¶15 A grant of summary judgment and the subsequent determination of appropriate remedies are separate issues that involve inherently different inquiries. Summary judgment review is limited to an inquiry into whether a "genuine dispute as to any material fact" exists and, if so, whether the "moving party is entitled to judgment as a matter of law." Utah R. Civ. P. 56(a). Because these are purely legal determinations, we review them for correctness. See Salt Lake County v. Holliday Water Co., 2010 UT 45, ¶ 14, 234 P.3d 1105. Conversely, when a party seeks equitable relief, it invokes the equitable jurisdiction of the court, see Ockey v. Lehmer, 2008 UT 37, ¶ 44, 189 P.3d 51, the nature of which is largely within the discretion of the court and, with the exception of the legal standard applied by the court, is reviewed accordingly, see Osguthorpe, 2015 UT 89, ¶ 37. Of particular relevance to the present case, a district court's determination of irreparable harm is reviewed for an abuse of discretion. Id. ¶¶ 37-38. Thus, we decline the Association's invitation to apply the summary judgment standard of review to the court's permanent injunction ruling and instead review that decision for an abuse of discretion.^[13]

¶16 Second, the Association argues that the district court erred in determining that the Association lacked the authority under the Maintenance Agreement to enforce the County Setback Ordinance as the County's assignee. "The interpretation of a contract is [a] legal question, which we . . . review for correctness." Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 2016 UT 6, ¶ 15, 367 P.3d 994.

ANALYSIS

I. Appellate Jurisdiction

¶17 Before reaching the merits of the parties' arguments, we must first address the jurisdictional concern that arose prior to oral argument. See Hayes v. Intermountain GeoEnvironmental Services, Inc., 2018 UT App 223, ¶ 2, 437 P.3d 650 ("Because acquiescence of the parties is insufficient to confer jurisdiction on the court, the initial inquiry of any court should always be to determine whether the requested action is within its jurisdiction.") (quotation simplified); McClellan v. State, 2012 UT App 316, ¶ 5, 290 P.3d 326 ("Whether we have subject matter jurisdiction is a threshold issue, which can be raised at any time and must be addressed before the merits of other claims."). Our concern arose during our review of the transcript of the remedies hearing during which the district court declined to issue a permanent injunction. After the court rendered its decision, it stated that the case up to that point "ha[d] been entirely focused on" the Association's request for a permanent injunction. The court subsequently offered the Association the choice between (1) "present[ing] evidence [at a subsequent hearing] strictly focused upon monetary damages that would need to be awarded in order to alleviate the breach or the actions of the [Cowans]" or (2) reserving that issue for future resolution and proceeding with an appeal from its final judgment denying the requested permanent injunction. The Association elected to proceed with the appeal.

¶18 It appeared to us that the district court may have intended to reserve the determination of monetary damages for consideration following the current appeal. If true, this would have robbed the court's order of finality—especially in the absence of the court's certification of its order as final pursuant to rule 54(b) of the Utah Rules of Civil Procedure. See Hayes, 2018 UT App 223, ¶ 2 ("As a general rule, appellate courts obtain jurisdiction over an appeal only after the district court issues a final order or judgment that ends the controversy between the litigants.") (quotation simplified). See also Bradbury v. Valencia, 2000 UT 50, ¶ 9, 5 P.3d 649 ("A judgment is final when it ends the controversy between the parties litigant.") (quotation simplified); id. ¶ 12 ("[O]rders and judgments that are not final can be appealed if . . . the trial court expressly certifies them as final for purposes of appeal under rule 54(b)."). We alerted the parties to our concern and requested that they be prepared to address it at oral argument.

¶19 At oral argument, the Association argued that it understood the district court's offer to be an "invitation to amend the pleadings," if it desired, cf. Utah R. Civ. P. 15(b)(1) ("A party may move—at any time, even after judgment—to amend the pleadings to conform them to the evidence and to raise an unpleaded issue."), because the Association sought in its complaint only an order requiring the Cowans to either "remove the Garage from the [Property] at their sole expense" or "to relocate the Garage at their sole cost and expense" to a location that would be in compliance with the CC&Rs and the County Setback Ordinance and did not request monetary damages. The Association explained that it had declined the court's invitation to amend its pleadings so it could pursue monetary damages against the Cowans and instead elected to stand on its complaint and the court's order as entered and to proceed with the current appeal. This is analogous to situations where plaintiffs elect to "stand on" a dismissed complaint and proceed directly with an appeal of the dismissal despite having been granted leave to amend the complaint dismissed without prejudice. See Bonneville Tower Condo. Mgmt. Comm. v. Thompson Michie Assocs., Inc., 728 P.2d 1017, 1019 & n.1 (Utah 1986) (per curiam); McClellan, 2012 UT App 316, ¶¶ 7-8.

¶20 We do not read the court's offer to necessarily amount to an "invitation to amend the pleadings" because such an amendment may not have been necessary at that juncture by virtue of rule 54 of the Utah Rules of Civil Procedure, which directs district courts to "grant the relief to which each party is entitled, even if the party has not demanded that relief in its pleadings." Utah R. Civ. P. 54(c). Nevertheless, with the court having declined to award equitable relief and the Association having declined the offered opportunity to pursue monetary damages, "all claims and the rights and liabilities of all parties" had been "adjudicate[d]," thereby rendering the court's subsequent order a final, appealable order. Id. R. 54(a). Indeed, the order itself makes this clear: "This constitutes the final ruling of the Court and no further order is required."

¶21 Thus, having had our jurisdictional concerns assuaged, we now address the merits of the Association's appeal.

II. Injunctive Relief

¶22 "The right to an equitable remedy is an exceptional one, and absent statutory mandate, equitable relief should be granted only when a court determines that damages are inadequate and that equitable relief will result in more perfect and complete justice." Ockey v. Lehmer, 2008 UT 37, ¶ 44, 189 P.3d 51 (quotation simplified). By seeking only injunctive relief and waiving any claim for monetary damages at this juncture, the Association effectively "chose to invoke only the equitable jurisdiction of the court," which "jurisdiction is precluded if," among other things, "the plaintiff . . . will not suffer substantial irreparable injury." Id. (quotation simplified). This principle has been incorporated into the standard inquiry that district courts undertake when determining whether a permanent injunction is warranted:

A court may grant a permanent injunction if it determines that (1) the petitioner establishes standing by demonstrating special damages, (2) the petitioner has a property right or protectable interest, (3) legal remedies are inadequate, (4) irreparable harm would result, (5) court enforcement is feasible, and (6) petitioner merits the injunction after balancing the equities.

Johnson v. Hermes Assocs., Ltd., 2005 UT 82, ¶ 13, 128 P.3d 1151 (emphasis added).

¶23 Although the thrust of the Association's arguments focuses on the sixth prong—that the district court erred in engaging in a balancing of the equities—we do not reach that issue because the Association has not shown that the district court exceeded its discretion in determining that the Association had not suffered irreparable harm, thereby precluding equitable relief altogether.^[14]

¶24 Irreparable harm "is generally considered the most important" of the "ground[s] for injunctive relief." System Concepts, Inc. v. Dixon, 669 P.2d 421, 427 (Utah 1983). A party suffers irreparable harm if it "cannot be adequately compensated in damages" or sustains "damages [that] cannot be compensable in money." Carrier v. Lindquist, 2001 UT 105, ¶ 26, 37 P.3d 1112 (quotation simplified). An injury is irreparable "if the damages are estimable only by conjecture and not by any accurate standard." Johnson, 2005 UT 82, ¶ 18 (quotation simplified). In the present case, the Association's effort to establish irreparable harm falls short in two ways.

¶25 First, although the Association contends on appeal that it "has contemplated, and does contemplate, installation of [a road along the Plat 12 Right-of-Way]," it does