Posted by: Patricia Salkin | September 2, 2016

WY Supreme Court Holds Term “Principal Residence Site” in Covenant Unambiguously Referred to the Specific Areas Illustrated in Site Plan

The Appellants, Felix Felicis, LLC, Carol Baker and Mark Stein filed a Complaint against the Appellees, Riva Ridge Owners Association and the members of the Association’s Board of Directors and Site Committee, Cody Mueller, John Campbell, and Jeff Hussey, after the Site Committee rejected the Baker–Stein’s building plans for their home and writer’s studio in the Riva Ridge subdivision outside of Jackson, Wyoming. The Baker–Steins alleged breach of contract, tortious breach of the covenant of good faith and fair dealing, intentional interference with a contract and prospective economic advantage, injunctive relief, and punitive damages. The Baker–Steins then filed a Complaint for Declaratory Judgment, requesting that the district court determine the meaning of the term “principal residence site” in the covenants, and whether the Baker–Steins must receive permission from the Site Committee before planting trees for landscaping.

The district court granted summary judgment in favor of the Appellees on several issues including the breach of contract claim and that the Baker–Steins must gain Site Committee approval before planting trees for landscaping. Following a bench trial, the district court determined that the covenants intended to protect the landowners’ views of the Tetons and interpreted “principal residence site” in a way that required complete invisibility between the homes in the Riva Ridge subdivision. The Baker–Steins appealed the district court’s decisions.

In analyzing the “principal residence site” interpretation, the court found that the language in the covenants about visibility between structures on the tracts was straightforward and clear. It unambiguously required that a structure may not be visible from any “principal residence site,” and that the “principal residence site” of each tract was shown on Exhibit H of the covenants. On Exhibit H, each tract included a small box which denotes the location of the “homesite,” and no other possible “principal residence site” for each tract. Therefore, the plain language of the covenant stated that structures on other tracts would not be visible from that specific location, the “homesite” or principal residence site, as established on Exhibit H. Accordingly, to comply with the covenants, the Baker–Steins’ proposed home could not be visible from that specific area on the Jacksons’ and Mueller’s property.

Next, the court found that the district court erroneously determined that the Baker–Steins failed to identify a provision in the covenants that would entitle them to seek damages against the Appellees. Specifically, genuine issues of material fact existed to determine whether the Appellees acted in bad faith on the breach of contract claim and the district court’s order granting summary judgment was improper. Lastly, the court affirmed the district court’s conclusion that an owner must seek the Site Committee’s approval before planting trees on his or her tract excavation for landscaping because the covenants required Site Committee permission before proceeding.

Felix Felicis, LLC v Riva Ridge Owners Assoc., 2016 WL 3621101 (WY 6/30/2016)

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