Crossroads v. Landwehr ( 2022 )

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.
IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
THE CROSSROADS ESTATES HOMEOWNERS ASSOCIATION,
Plaintiff/Appellee,
v.
LENORD H. LANDWEHR, et al., Defendants/Appellants.
No. 1 CA-CV 21-0378
FILED 4-21-2022
Appeal from the Superior Court in Maricopa County
No. CV2019-095283
The Honorable Janice K. Crawford, Judge
REVERSED AND REMANDED
COUNSEL
Burch & Cracchiolo PA, Phoenix
By Daryl Manhart, Andrew Abraham, Casey S. Blais
Counsel for Defendants/Appellants
Maxwell & Morgan PC, Mesa
By Charles E. Maxwell
Counsel for Plaintiff/Appellee
CROSSROADS v. LANDWEHR, et al.
Decision of the Court
MEMORANDUM DECISION
Presiding Judge Jennifer B. Campbell delivered the decision of the Court,
in which Judge Randall M. Howe and Judge James B. Morse Jr. joined.
C A M P B E L L, Judge:
¶1 Appellants Lenord and Kimberly Landwehr appeal from the
superior court’s grant of summary judgment in favor of The Crossroads
Estates Homeowners Association (Crossroads HOA) on the issue of
whether their property is subject to the Estates’ covenants, conditions, and
restrictions (CC&Rs). For CC&Rs or any other real covenant to be
enforceable there must be a writing which satisfies the Statute of Frauds.
Nickerson v. Green Valley Recreation, Inc., 228 Ariz. 309, 315, ¶ 11 (App. 2011).
Because neither the Landwehrs nor their predecessors in interest signed the
CC&Rs or any other satisfactory writing, the court erred by enforcing the
CC&Rs against the Landwehrs. Consequently, we reverse and remand for
further proceedings.
BACKGROUND
¶2 The Landwehrs own Lot 11 in the Crossroads Estates. The
Estates’ CC&Rs were recorded in 1997, and were declared and signed by
40th Street and McLellan L.L.C., which owned Lots 1 through 9 and 12
through 17 at the time. The CC&Rs established Crossroads HOA and
required each “Lot” owner to, among other things, pay annual assessments
for common area maintenance and improvements. The CC&Rs define “Lot”
as “any of Lots 1 through 19 shown upon the Plat of Property,” but a
separate provision excludes Lots 18 and 19. The only specific mention of
Lot 11 is a farm animal exemption. The then-owners of Lot 11, the
Wermuths, did not sign the declaration of CC&Rs, nor did the then-owners
of Lots 18 and 19. In fact, the document did not even contain designated
signature lines nor the owners’ names to allow the three lot owners to
execute the document.
¶3 The Wermuths subsequently conveyed Lot 11 to Valerie
Randall, who sold it to the Landwehrs in 2018. Crossroads HOA sued the
Landwehrs in July 2019, asserting a lien for unpaid assessments dating back
to the Landwehrs’ date of purchase. In response, the Landwehrs contended
2
CROSSROADS v. LANDWEHR, et al.
Decision of the Court
that Lot 11 is not subject to the CC&Rs because they were never signed by
any owner of Lot 11.
¶4 On cross-motions for summary judgment, the superior court
ruled in favor of Crossroads HOA determining that Lot 11 was subject to
the CC&Rs and HOA assessments. The court reasoned that it was required
to interpret the CC&Rs, and that if the CC&Rs “intended Lot 11 to be
excluded,” Lot 11 would have been included in the provision excluding
Lots 18 and 19. The court interpreted the CC&Rs to subject Lots to
assessments upon conveyance from a “Developer” and found that the
Wermuths were “Developers” based on a separate agreement for an
avigation easement. On that basis, the court concluded that Lot 11 became
subject to regular assessments when the Wermuths conveyed it to Valerie
Randall and that it remained subject to assessments after Randall’s
conveyance to the Landwehrs.
¶5 The Landwehrs moved for a new trial, which the court
denied. The Landwehrs timely appealed.
DISCUSSION
¶6 On appeal, the Landwehrs challenge the superior court’s
conclusion that Lot 11 is subject to the CC&Rs and the court’s denial of their
motion for summary judgment, requesting the dismissal of the HOA’s
lawsuit. In determining whether either party is entitled to summary
judgment on cross-motions, we review questions of law de novo and view
the facts in a light most favorable to the party against whom summary
judgment was granted. Matter of Estate of Podgorski, 249 Ariz. 482, 484, ¶ 8
(App. 2020). The court should grant summary judgment only if it finds
there are no genuine issues of material fact and that one party is entitled to
judgment as a matter of law. Grain Dealers Mut. Ins. Co. v. James, 118 Ariz.
116, 118 (1978). Summary judgment is inappropriate if the facts, even if
undisputed, would allow reasonable minds to differ. Nelson v. Phoenix
Resort Corp., 181 Ariz. 188, 191 (App. 1994).
I. Enforceability of CC&Rs Against Lot 11
¶7 Regardless of whether the CC&Rs were intended to apply to
Lot 11, they are only enforceable against Lot 11 if the elements for the
creation of a real covenant are met. Four prerequisites must be met to create
a covenant that runs with the land in perpetuity:
(1) there must be a writing which satisfies the Statute of
Frauds;
3
CROSSROADS v. LANDWEHR, et al.
Decision of the Court
(2) the parties must intend that the covenant run with the
land;
(3) the covenant must touch and concern the land, i.e. make
the land itself more useful or valuable to the benefited party;
and
(4) privity of estate must exist between the original grantor
and the grantee at the time the covenant is made.
Nickerson, 228 Ariz. at 315, ¶ 11. The Landwehrs focus on the first
prerequisite, contending that no owner of Lot 11 ever agreed in writing that
Lot 11 would be subject to the CC&Rs. See Ahwatukee Custom Estates Mgmt.
Ass’n, Inc. v. Turner, 196 Ariz. 631, 634, ¶ 5 (App. 2000) (“CC&Rs constitute
a contract between the subdivision’s property owners as a whole and
individual lot owners.”); see also Phillips v. Hatfield, 624 S.W.3d 464, 475
(Tenn. 2021) (“[A] person cannot restrict the use of another’s land simply
by recording restrictive covenants that purport to apply to that land.”).
Crossroads HOA contends that multiple documents, when read together,
establish the intent that Lot 11 be bound.
¶8 Multiple writings may satisfy the memorandum requirement
if (1) one of the writings is signed and (2) the writings clearly indicate that
they relate to the same transaction. Nowell v. Andrew Wright Enters., 143
Ariz. 79, 83 (App. 1984) (quoting Restatement (Second) of Contracts § 132
(1979)). Crossroads HOA identifies three writings they believe satisfy the
multiple writing requirements: the CC&Rs themselves, an “H.O.A. . . .
Addendum” included in the Landwehrs’ purchase documents, and a 1996
“Avigation Easement” signed by the Wermuths.
¶9 As for the CC&Rs, the superior court concluded that the
Wermuths were “Developers” thereunder. This finding is not supported in
the document itself. While the CC&Rs refer to “Developers” more than
once, there is no definition of who is a “Developer.” Moreover, the
Wermuths, the original owners of Lot 11, did not sign the CC&Rs, and no
other record evidence shows that they agreed to accept that role.
¶10 The HOA Addendum is signed by the Landwehrs and shows
they were aware of Crossroads HOA and the assessments set forth in the
CC&Rs. The Addendum does not show, however, that the Landwehrs
agreed that Lot 11 would be subject to the CC&Rs, as it states that “this
property is ‘grandfathered in’ and may have certain privileges associated
with that. Buyer to investigate what those privileges are.”
4
CROSSROADS v. LANDWEHR, et al.
Decision of the Court
¶11 The superior court also relied on the Avigation Easement
because it identifies the Wermuths as “Owners” and states that the
“Owner[s] desire[] to subdivide and develop [the property known as
Crossroads Estates] for residential purposes.” (Emphasis added). The
Avigation Easement has nothing to do with the CC&Rs; it simply served to
grant the City of Mesa “an easement for avigation purposes over and across
[Crossroads Estates].” Indeed, the Avigation Easement was executed
several months before the CC&Rs. It therefore does not evidence any intent
to bind Lot 11 to anything other than an aviation easement which has no
relation to the CC&Rs.
¶12 Crossroads HOA also cited a “Subdivision Report” prepared
by the Arizona Department of Real Estate that identified the Wermuths as
“SUBDIVIDER[S]” for Crossroads Estates and stated that “[a]ll lot owners
will be members of the association.” Assuming without deciding the report
is admissible evidence, it also fails to show the intent of the owners of Lot
11 because it was not signed by the then-owners of Lot 11, the Wermuths,
nor was it signed by anyone else. See Ariz. R. Civ. P. 56(c)(6) (“Affidavits
may be supplemented or opposed by . . . other materials that would be
admissible in evidence.”). The report also states that “not all of the
information in this report has been verified” and that “certain information
has been accepted . . . as true and accurate based on attestation of the
subdivider and/or the subdivider’s agents.” As such, while this report may
be evidence that the Wermuths knew Crossroads HOA existed, it does not
show that they “acknowledged Lot 11 was subject to the CC&Rs” as
Crossroads HOA contends.
¶13 The HOA also cites about a dozen documents attached to its
cross motion for summary judgment, contending these “independently and
collectively” satisfy the Statute of Frauds requirement. The superior court
did not consider these documents because it found they were inadmissible
due to a lack of proper custodial affidavits. See Ariz. R. Civ. P. 56(c)(5)
(requiring supporting affidavit to be based on personal knowledge, to set
out admissible facts, to show the affiant’s competency to testify on those
facts, and to attach or serve documents referenced therein). Crossroads
HOA argues we should consider the documents on appeal because “almost
all of [them] were either produced by the Landwehrs in response to
discovery requests and/or were supported by appropriate custodial
affidavits.”
¶14 Documents produced in discovery are not automatically
admissible, however. See Ariz. R. Civ. P. 26(b)(1) (“Information within this
scope of discovery need not be admissible in evidence to be discoverable.”);
5
CROSSROADS v. LANDWEHR, et al.
Decision of the Court
Catrone v. Miles, 215 Ariz. 446, 454, ¶ 25 (App. 2007) (differentiating between
the standard for discoverability and the standard for admissibility).
Moreover, the HOA’s affidavits plainly fail to comply with Rule 56(e) of the
Arizona Rules of Civil Procedure because they do not demonstrate personal
knowledge of the documents at issue. In fact, the affidavits only specifically
identify one of the documents at issue—a ledger showing payments from
the Landwehr’s predecessors in interest to the HOA—but that document is
identified and described only by its bates number. Cf. Wells Fargo Bank, N.A.
v. Allen, 231 Ariz. 209, 213–14, ¶¶ 18–19 (App. 2012) (holding affidavit
insufficient to invoke business-records hearsay exception or support
motion for summary judgement because it did not describe or attach
records at issue and because affiant did not describe his personal
knowledge of specific records or manner in which they were prepared and
stored). The superior court was correct to decline consideration of these
additional documents.
¶15 For these reasons, the writings offered by Crossroads HOA
do not satisfy the Statute of Frauds. Therefore, the CC&Rs are not
enforceable covenants with respect to Lot 11.
II. Unjust Enrichment
¶16 Crossroads HOA contends we can affirm based on unjust
enrichment, asserting that the Landwehrs “have taken full advantage of all
of the services and benefits” it provides. See, e.g., Pi’Ikea, LLC v. Williamson,
234 Ariz. 284, 289, ¶ 15 n.7 (App. 2014) (“[W]e may affirm a trial court’s
grant of summary judgment if it is correct for any reason.”). Crossroads
HOA cites no record evidence to show this matter was even addressed in
the superior court. Their statement of facts in support of their motion for
summary judgment asserted only that the Landwehrs “acknowledged they
received at least irrigation benefits at the expense of [Crossroads HOA],”
citing correspondence between the parties’ counsel.
¶17 In any event, this appeal arises from a stipulated judgment for
foreclosure of a homeowners’ association lien, and the superior court only
granted summary judgment regarding “whether Lot 11 is subject to the
CC&Rs including payment of assessments.” Moreover, the parties dispute
whether Crossroads HOA properly pleaded an unjust enrichment claim.
As such, whether the Crossroads HOA can prevail on an unjust enrichment
claim and, if so, what their recovery would be remains unresolved.
6
CROSSROADS v. LANDWEHR, et al.
Decision of the Court
III. Attorneys’ Fees and Costs
¶18 Both sides request their attorneys’ fees and costs incurred in
this appeal. The Landwehrs also request that we “direct[] the superior court
[on] remand to . . . award their costs and attorneys’ fees incurred in the
superior court proceedings.” We grant the Landwehrs’ request under
A.R.S. § 12-341.01(A), but only as to attorneys’ fees and taxable costs
incurred in this appeal. See Lacer v. Navajo Cnty., 141 Ariz. 392, 394 (App.
1984) (“A party is entitled to an award of its attorney’s fees under A.R.S.
§ 12-341.01 if judgment in its favor is based upon the absence of the contract
sued upon by the adverse party.”). The superior court may consider
whether to award attorneys’ fees and costs at the conclusion of the case. See
Schwab Sales, Inc. v. GN Constr. Co., Inc., 196 Ariz. 33, 37, ¶ 11 (App. 1998)
(party may recover attorneys’ fees under A.R.S. § 12-341.01(A) on an unjust
enrichment claim if the claim “would not exist but for a contract”).
CONCLUSION
¶19 We reverse the grant of summary judgment for Crossroads
HOA and remand with instructions to enter judgment for the Landwehrs
on Crossroads HOA’s lien foreclosure claim. We vacate the associated
attorneys’ fees and costs award and remand for further proceedings
consistent with this decision.
AMY M. WOOD • Clerk of the Court
FILED: JT
7