IN THE SUPREME COURT, STATE OF WYOMING
2014 WY 116
APRIL TERM, A.D. 2014
September 17, 2014
STAR VALLEY RANCH ASSOCIATION,
Appellant
(Defendant),
v.
WILLIAM DALEY, Trustee of the Daley Family
S-13-0244
Trust; GERALD KITTELSON and SARA
KITTELSON, Trustees of the Kittelson Revocable
Trust; FRANK GOGLIO, and BOB LOGAN and
KATHY LOGAN, Trustees of the Logan 1998
Revocable Trust,
Appellees
(Plaintiffs).
Appeal from the District Court of Lincoln County
The Honorable Marvin L. Tyler, Judge
Representing Appellant:
James K. Sanderson and Michael D. Allen, Sanderson Law Office, Afton,
Wyoming. Argument by Mr. Sanderson.
Representing Appellees:
Paula A. Fleck and Matthew W. Kim–Miller, Holland & Hart, LLP, Jackson,
Wyoming. Argument by Mr. Kim-Miller.
Before BURKE, C.J., and HILL, KITE*, DAVIS, and FOX, JJ.
*Chief Justice at time of oral argument.
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.
BURKE, Chief Justice.
[¶1] The Star Valley Ranch Association attempted to amend the restrictive covenants
governing the Star Valley Ranch subdivision in Lincoln County, Wyoming. The
Appellees, owners of property in the subdivision, filed suit in district court seeking to
invalidate the amendments on the basis that the Association had not complied with the
previous covenants’ requirements for amendments. The district court granted summary
judgment in favor of the Appellees. The Association appealed the district court’s
decision. We will affirm.
ISSUES
[¶2] The Association presents these issues:
1. Where more than 70% of the lot owners in the entire
subdivision consented to amend the covenants, did the district
court err in holding that the amended covenants were invalid
as they pertained to Plats 1, 2, and 3 of the Star Valley Ranch
Subdivision?
2. Did the district court err when it held that no legal
impracticability occurred upon the Clerk’s refusal to record
the signatures of those who consented to the modification of
the covenants?
3. Where the law of the case held that the original
covenants are to be interpreted to apply only to the specific
plats that were described in the covenants, did the district
court err in holding the Appellees had standing to challenge
the amended covenants in plats where they were not lot
owners?
[¶3] The Appellees rephrase the issues:
1. Did the district court properly grant summary
judgment in favor of the [Owners] because [the Association]
failed to satisfy various requirements to amend and restate
eleven separate sets of covenants as a single document?
2. Did the district court properly consider the entirety of
the attempted global amendment and restatement of eleven
sets of covenants and hold that the [Owners] have standing to
challenge that amendment process?
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FACTS
[¶4] Leisure Valley, Inc., a Nevada corporation, founded Star Valley Ranch, a
subdivision in Lincoln County, Wyoming. Beginning in 1970, and ending in 1986,
Leisure Valley planned and built out twenty-one plats within the boundaries of the
subdivision. The subdivision now includes more than 2,000 lots.
[¶5] Leisure Valley drafted and recorded sets of covenants for eleven separate phases
of the development, eventually covering all twenty-one plats. The covenants were
recorded for the following plats in this chronological order:
Phase 1. Plats 1 and 2, August 14, 1970;
Phase 2. Plat 20, August 19, 1970;
Phase 3. Plat 3, March 29, 1971;
Phase 4. Plats 4, 5, and 6, June 25, 1971;
Phase 5. Plats 7 and 8, April 3, 1972;
Phase 6. Plats 9 and 10, March 23, 1976;
Phase 7. Plats 12, 13, and 14, August 15, 1977;
Phase 8. Plats 15 and 16, April 2, 1979;
Phase 9. Plats 17 and 18, March 7, 1980;
Phase 10. Plat 21, March 21, 1983; and
Phase 11. Plats 4, 11, and 22, February 20, 1986.
We will analyze specific language from the covenants in our discussion below. For now,
we note generally that the covenants establish various use restrictions, such as a
limitation to single family residential development. The restrictions and definitions are
similar, but not identical, in all eleven sets of covenants. All contain provisions that the
covenants may be amended by “a written agreement executed by seventy percent (70%)
of the then record Lot Owners covered hereby . . . placed on record in the Office of the
County Recorder of Lincoln County.”
[¶6] Beginning in 2010, the Association mounted an effort to amend the eleven sets of
covenants into a single, uniform set of covenants applicable to the entire subdivision. A
committee was formed to survey owners in the subdivision about potential changes to the
covenants, and to draft a new set of covenants based on that input. In September of 2010,
copies of the proposed amended covenants were sent to all of the lot owners of record,
along with a form to be returned signifying whether the lot owners “Approve” or “Do
Not Approve” the amended covenants. The form included a signature line for the owner
and lines for two witnesses, but the form did not require that the signatures be
acknowledged or notarized.
[¶7] The Association received forms from 1,476 lot owners of record approving the
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amendments. In total, that represented 73% of all of the lot owners of record. However,
only 60% of the owners in Plats 1 and 2, and only 63% of the owners in Plat 3, voted to
approve the amendments.
[¶8] The Association considered that the amendments had been approved because more
than 70% of the lot owners of record throughout the entire subdivision had voted to
approve. In June of 2011, the Association attempted to file and record a copy of the
amended covenants, along with the 1,476 signatures of the lot owners who had approved
the amendments, in the county property records. The Lincoln County Clerk refused to
record that document. As a substitute, the chairman of the Association’s board of
directors signed, and had notarized, an affidavit reciting that more than 70% of the lot
owners had submitted the required consent to amend the covenants. The Lincoln County
Clerk accepted this affidavit, along with the amended covenants, for filing and
recordation.
[¶9] The Appellees challenged the validity of the amended covenants by filing suit in
district court, seeking a declaration that the amended covenants were invalid, and an
injunction prohibiting the Association from implementing and enforcing the amended
covenants. In broad terms, the Appellees asserted that the eleven sets of covenants had to
be amended separately, and that the Association had improperly aggregated the votes
from all eleven sets of owners in order to calculate an approval rate greater than 70%.
The Appellees also contended that all eleven sets of covenants required that amendments
must be accomplished by “a written agreement executed by seventy percent (70%) of the
then record Lot Owners covered hereby . . . placed on record in the Office of the County
Recorder of Lincoln County.” According to the Appellees, the affidavit signed by the
chairman of the Association’s board of directors did not constitute a written agreement
executed by lot owners of record, and was therefore legally inadequate to effect the
amendments to the covenants.
[¶10] The Appellees filed a motion for summary judgment, which the Association
opposed. The district court ruled in favor of the Appellees and against the Association.
This timely appeal followed.
STANDARD OF REVIEW
[¶11] We have said that the “propriety of granting a motion for summary judgment
depends upon the correctness of the dual findings that there is no genuine issue as to any
material fact and that the prevailing party is entitled to judgment as a matter of law.”
Dwan v. Indian Springs Ranch Homeowners Ass’n, 2008 WY 74, ¶ 6, 186 P.3d 1199,
1201 (Wyo. 2008) (citing W.R.C.P. 56(c)). Summary judgment involves a purely legal
determination, and accordingly, we undertake de novo review of the district court’s
decision. Glenn v. Union Pacific R.R. Co., 2008 WY 16, ¶ 6, 176 P.3d 640, 642 (Wyo.
2008). “The facts are reviewed from the vantage point most favorable to the party
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opposing the motion, and we give that party the benefit of all favorable inferences that
may fairly be drawn from the record.” Brumbaugh v. Mikelson Land Co., 2008 WY 66,
¶ 11, 185 P.3d 695, 701 (Wyo. 2008).
DISCUSSION
[¶12] Restrictive covenants are contractual in nature, and are interpreted in accordance
with the principles of contract law. Bedessem v. Cunningham, 2012 WY 36, ¶ 16, 272
P.3d 310, 313 (Wyo. 2012); Stevens v. Elk Run Homeowners’ Ass’n, 2004 WY 63, ¶ 12,
90 P.3d 1162, 1165-66 (Wyo. 2004). It is well-established that:
We seek to determine and effectuate the intention of the
parties, especially the grantor(s), as it may appear or be
implied from the instrument itself. See American Holidays,
Inc. v. Foxtail Owners Ass’n, 821 P.2d 577, 579 (Wyo. 1991);
Bowers Welding & Hotshot, Inc. v. Bromley, 699 P.2d 299,
303 (Wyo. 1985); Kindler [v. Anderson, 433 P.2d 268,] 270-
71 [(Wyo. 1967)]. Intention of the parties is to be determined
from the entire context of the instrument, and not from a
single clause. American Holidays, at 579; Bowers Welding &
Hotshot, at 303; Kindler, at 270-71. Where the language
imposing the restriction(s) is clear and unambiguous, we
construe it according to its plain and ordinary meaning
without reference to attendant facts and circumstances or
extrinsic evidence, and the rule of strict construction does not
apply. . . . American Holidays, at 579; Kincheloe v. Milatzo,
678 P.2d 855, 859 (Wyo. 1984); Kindler, at 271.
Anderson v. Bommer, 926 P.2d 959, 961-62 (Wyo. 1996).
[¶13] We begin by examining the language in the eleven sets of covenants. The
language pertaining to amendments is the same in all eleven:
All of the conditions, covenants and reservations set forth
herein shall continue and remain in full force and effect at all
times against said property and the Owners thereof, subject to
the right of change or modification hereinafter provided until
January 1, 1992, and shall as then in force be continued for a
period of twenty years, and thereafter for successive periods
of twenty years each without limitation, unless within the six
months prior to January 1, 1992, or within the six months
prior to the expiration of any successive twenty-year period
thereafter, a written agreement executed by seventy percent
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(70%) of the then record Lot Owners covered hereby be
placed on record in the Office of the County Recorder of
Lincoln County, by the terms of which agreement any of said
conditions or covenants are changed, modified or
extinguished, in whole or in part, as to all or any part of the
property subject thereto, in the manner and to the extent
therein provided. In the event that any such written
agreement of change or modification be duly executed and
recorded, the original conditions and covenants, as therein
modified, shall continue in force for successive periods of
twenty years each, unless and until further changed, modified
or extinguished in the manner herein provided for, by mutual
written agreement of not less than seventy percent (70%) of
the then Owners of record title of said property.
[¶14] There is no dispute that amendments to the covenants must receive the approval of
“seventy percent (70%) of the then record Lot Owners covered hereby.” The Association
interprets this language to mean 70% of the property owners in the Star Valley Ranch
subdivision as a whole. Because it obtained the approval of 73% of the owners in the
aggregate, the Association claims that the covenants were properly amended. The
Appellees’ interpretation is that the eleven separate sets of covenants created eleven
separate and distinct phases, and that the votes of the property owners must be counted
separately for each phase. The proposed amendments received only 60% approval in the
first phase, covering Plats 1 and 2, and only 63% approval in the third phase, covering
Plat 3. Under the Appellees’ interpretation, the proposed amendments failed as to Plats
1, 2, and 3.
[¶15] To help with our interpretation of the phrase “seventy percent (70%) of the then
record Lot Owners covered hereby,” we turn to the definitions contained in the
covenants. The covenants for Plats 1, 2, and 3 include the same definitions. There is no
definition for the term “record Lot Owners covered hereby,” but the term “Owner” is
defined as “the record owner, whether one or more persons or entities, of a fee simple
title to any Lot, and shall also include contract purchasers and the Declarant, but shall
exclude those having such interest merely as security for the performance of any
obligation.” In turn, the term “Lot” is defined as “any plot of land shown upon any
recorded subdivision map of the Property, with the exception of the Common Area.”
Finally, the term “Property” is defined as “that certain real property hereinbefore
described, and such additions thereto as may hereafter be brought within the jurisdiction
of the Association.” The “Association” refers to the Star Valley Ranch Association.
[¶16] The “certain real property hereinbefore described” is the property described in
Exhibit A of each set of covenants. In the first phase, the property so described is Plats 1
and 2, and in the third phase, it is Plat 3. The phrase “that certain real property
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hereinbefore described” is plain and unambiguous enough, but we must also consider the
phrase “and such additions thereto as may hereafter be brought within the jurisdiction of
the Association.”
[¶17] Although both parties fail to explain their interpretations of this key language in
any detail, we can discern their positions from their broader arguments. The Association
asserts that “such additions thereto as may hereafter be brought within the jurisdiction of
the Association” refers to any and all properties that later come within the jurisdiction of
the Association. All eleven sets of covenants provide the Association with power to
maintain, administer, and enforce the covenants, and to assess owners for their share of
costs relating to recreational facilities and common areas. According to the Association,
each successive phase brought its Plat or Plats within the jurisdiction of the Association,
and so all twenty-one Plats have become additions falling within the definition of the
term “Property.” Under the Association’s interpretation, all of the Plats have been
“additions” to a single entity.
[¶18] The Appellees offer a different interpretation. On the same page as the definition
of property, which includes “such additions thereto as may hereafter be brought within
the jurisdiction of the Association,” is a section entitled “Annexation of Additional
Properties.” It provides that “Additional properties in Lincoln County, Wyoming may be
annexed hereto by the Developer, LEISURE VALLEY, INC., or its successors, and said
properties may be annexed to said property without the assent of Class A. members.”
Annexation, according to the Appellees, is how additional property is brought within the
jurisdiction of the Association. It is undisputed that neither the Association nor the
Developer ever made use of the annexation provision. On that basis, the Appellees assert
that each of the eleven different sets of covenants remain applicable only to the plats
described in its version of Exhibit A.
[¶19] The district court accepted the Appellees’ interpretation, concluding that “the
manner by which the Covenants governing Plats 1 and 2 may be changed . . . is clear and
unambiguous.” The amendments had to be approved by at least 70% of the owners of
lots in Plats 1 and 2. Similarly, the district court also concluded that amendments had to
be approved by at least 70% of the owners of lots in Plat 3. For several reasons, we agree
with the district court.
[¶20] In general, property owners are bound by restrictive covenants if they took the
property with notice of those covenants. See Bowers Welding & Hotshot, 699 P.2d at
305; Hein v. Lee, 549 P.2d 286, 292 (Wyo. 1976). Under the Appellees’ interpretation,
the covenants applicable to each lot may be discerned from the record. Under the
Association’s interpretation, however, lot owners are not given sufficient notice of what
covenants apply to their properties, and of what other properties share the same
covenants. As we have noted, the first set of covenants, applicable to Plats 1 and 2, was
filed on August 14, 1970. The third set of covenants, applicable to Plat 3, was filed on
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March 29, 1971. There is no document of record providing notice to owners in Plat 3
that they are also bound by the set of covenants applicable to Plats 1 and 2. There is also
nothing in the chain of title to provide notice to owners in Plats 1 and 2 that the property
in Plat 3 has become subject to the same covenants applicable to Plats 1 and 2. Further,
the covenants applicable to Plats 1 and 2 indicate that they may be amended by the
approval of 70% of the owners of lots in those plats. There is nothing in the record to
provide these owners with notice that amendments could be effected as attempted by the
Association, that is, by the approval of 70% of the owners in the entire subdivision, even
though fewer than 70% of the owners of lots in Plats 1 and 2 voted to approve.
[¶21] In addition, as we noted previously, the different sets of covenants contain similar,
but not identical, restrictions. For example, the first set of covenants, applicable to Plats
1 and 2, provides that “No residential structure having a floor area of Less than 750
square feet, not including open porches, patios and garages, shall be erected or placed on
any residential Lot.” The final set of covenants, applicable to Plats 4, 11, and 22, has a
similar provision, but it requires residential structures to have floor area of 900 square
feet or more. If the Association is correct that all of the property in the Star Valley Ranch
subdivision has become aggregated under one set of covenants, there is no way of
deciphering which square footage limitation now applies to which lots.
[¶22] We also note that the definition of the term “Property” quoted above appears in
each of the first eight sets of covenants, covering Plats 1-10, 12-16, and 20. However,
the definition of the term “Property” in the final three sets of covenants, covering Plats 4,
11, 17-18 and 21-22, is limited to “that certain real property described on Exhibit A
attached hereto and made a part hereof.” There is no mention of “such additions thereto
as may hereafter be brought within the jurisdiction of the Association.” Under the
Association’s interpretation, the inconsistent definitions of “Property” could lead to the
anomalous result that some of the plats are aggregated while some are not.
[¶23] Finally, the Appellees’ version provides an explanation for the annexation
provision of the covenants. Under the Association’s version, additional property may be
added merely by bringing it within the jurisdiction of the Association. The annexation
provision would be unnecessary and would serve no purpose.
Our rules of interpretation require that we interpret a
contract as a whole, reading each provision in light of all the
others to find their plain meaning. Arnold v. Ommen, 2009
WY 24, ¶ 40, 201 P.3d 1127, 1138 (Wyo. 2009); see also
Caballo Coal Co. v. Fid. Exploration & Prod. Co., 2004 WY
6, ¶ 11, 84 P.3d 311, 314-15 (Wyo. 2004). We presume each
provision in a contract has a purpose, and we avoid
interpreting a contract so as to find inconsistent provisions or
so as to render any provision meaningless. Scherer v. Laramie
7
Reg’l Airport Bd., 2010 WY 105, ¶ 11, 236 P.3d 996, 1003
(Wyo. 2010).
Claman v. Popp, 2012 WY 92, ¶ 28, 279 P.3d 1003, 1013 (Wyo. 2012); Sheridan Fire
Fighters Local No. 276 v. City of Sheridan, 2013 WY 36, ¶ 16, 303 P.3d 1110, 1115
(Wyo. 2013).
[¶24] For these reasons, we agree with the district court’s ruling. Each set of covenants
remains applicable only to the plats listed in its Exhibit A, and approval by 70% of the lot
owners in those plats is necessary to amend the covenants. Because only 60% of the lot
owners in Plats 1 and 2 voted to amend their covenants, and only 63% of the lot owners
in Plat 3 voted to amend their covenants, the amendments failed as to those plats. The
district court did not err in holding that the amended covenants were invalid as they
pertained to Plats 1, 2, and 3 of the Star Valley Ranch Subdivision.
[¶25] In its second issue, the Association raises the defense of impracticability. The
district court wrote in its decision that “it is undisputed that a written agreement was not
properly filed. . . . It is undisputed that the [Association] never attempted to record an
agreement executed by at least 70% of the then record owners covered by their respective
covenants.” The Association does not seriously dispute these findings, and it agrees that
the sets of covenants state that amendments require “a written agreement executed by
seventy percent (70%) of the then record Lot Owners . . . placed on record in the Office
of the County Recorder of Lincoln County.” The Association contends, however, that it
was excused from complying with that requirement on the basis of impracticability.
[¶26] The Association submitted the signed approvals of the lot owners to the County
Clerk for filing. The County Clerk refused to record the signature pages. This refusal,
according to the Association, made it impossible to comply with the requirement of filing
an agreement. It relies on Mortenson v. Scheer, 957 P.2d 1302, 1306 (Wyo. 1998), in
which we said that the “rule of impracticability to excuse performance is invoked when
supervening circumstances render performance of one of the conditions of the contract
impracticable.”
[¶27] The Appellees counter that it would not have been impracticable to file an
agreement if the Association had gone about it differently. They point out that Wyo. Stat.
Ann. § 34-1-102 (LexisNexis 2013) defines a “conveyance” to include “every instrument
in writing by which any estate or interest in real estate is created, alienated, mortgaged or
assigned, or by which the title to any real estate may be affected in law or in equity.” The
Appellees contend that an amendment to existing covenants fits the definition of a
conveyance. Wyoming law requires conveyances to be “acknowledged by the party or
parties executing same, before any notarial officer.” Wyo. Stat. Ann. § 34-1-113.
County Clerks in Wyoming are required to “receive and record at length all deeds,
mortgages, conveyances, patents, certificates and instruments left with him for that
8
purpose.” Wyo. Stat. Ann. § 34-1-119(a). The Appellees claim that the Association
could have asked lot owners to return notarized forms approving of the amendments, and
the County Clerk would have filed and recorded those documents.
[¶28] The Appellees rely on Riverview Heights Homeowners’ Ass’n v. Rislov, 2009 WY
55, 205 P.3d 1035 (Wyo. 2009), in which the applicable covenants provided for
amendment “by instruments executed and acknowledged in the form prescribed for the
execution of deeds by seventy-five (75) percent of the owners of the total acreage
contained in this tract.” Id., ¶ 3, 205 P.3d at 1037. The homeowners’ association instead
filed an “Amendment to Restrictive Covenants” that was “executed by the Association’s
officers, whose signatures were notarized.” Id., ¶ 4, 205 P.3d at 1037. We concluded
that the Association had not complied with the covenants’ requirement to file instruments
executed and acknowledged by the owners, and ruled that the Association’s attempt to
amend the covenants was invalid. Id., ¶ 21, 205 P.3d at 1040. The Appellees contend
that the same is true in this case.
[¶29] We note that the language of the covenants in Riverview is not the same as the
language in the sets of covenants for the Star Valley Ranch subdivision. The covenants
in Riverview required “instruments executed and acknowledged in the form prescribed
for the execution of deeds.” The Star Valley Ranch covenants require only execution, not
acknowledgement, and do not specifically require instruments in the form of deeds. But
we do not need to decide in this case whether the Association was required to obtain
notarized signatures from the Star Valley Ranch lot owners.
[¶30] Even if the Clerk had accepted and recorded the copies of the forms signed by the
owners to indicate their approval of the amended covenants, those documents still would
not validly amend the covenants. From the beginning of its effort to amend the
covenants, the Association made it clear that its intent was to establish a single, unified
set of covenants to cover the Star Valley Ranch subdivision as a whole. The resolution it
passed supporting the amendments explained that the amendments would create a “single
uniform version” of the covenants. The solicitation it sent out to lot owners indicated that
a uniform set of covenants would be established. The amended covenants also purported
to establish a single set of covenants applicable to all of the property in the subdivision.
As counsel for the Appellees expressed during a hearing before the district court, the
Association took an all or nothing approach. Fewer than 70% of the lot owners in Plats
1, 2, and 3 approved of the amendments and, therefore, the Association’s efforts failed as
a whole. The amendments were never validly approved, so no matter what document the
Association filed or tried to file with the County Clerk, the amendments were invalid.
The Association’s claim of impracticability fails because, even if the County Clerk had
accepted the document offered by the Association, the amendments were still invalid.
[¶31] In its third issue, the Association contests the Appellees’ standing to challenge the
amendments as a whole. The Association points out that the district court determined
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that each of the eleven sets of covenants had to be amended separately. Based on that
ruling, the Association does not dispute that the Appellees have standing to challenge the
amendments to the sets of covenants applicable to the property they own. The
Association maintains, however, that the Appellees do not have standing to challenge the
amendments to the sets of covenants applicable to Plats in which the Appellees do not
own property.
[¶32] With regard to standing, we have said:
A litigant has standing when he has a personal stake in the
outcome of the controversy. In the declaratory judgment
context, the requirement that a litigant have a personal stake
in the outcome of the controversy is intended to ensure that he
or she is sufficiently interested in a case to present a
justiciable controversy.
Carnahan v. Lewis, 2012 WY 45, ¶ 18, 273 P.3d 1065, 1071 (Wyo. 2012) (internal
citation omitted). The Association contends that the Appellees lack standing because
they do not have a personal stake in the application of the amended covenants to Plats in
which they own no property.
[¶33] As an initial matter, we note that the Appellees own lots in six of the twenty-one
plats. They plainly have standing to challenge the amendments as to those plats. Further,
some sets of covenants cover more than one plat. Phase 7, for example, covers Plats 12,
13, and 14. Because one of the Appellees owns property in Plat 12, he has standing to
challenge the amendments as they apply to all three plats. On this basis, the Appellees
have standing to challenge the amendments as they apply to a total of eleven of the
twenty-one plats.
[¶34] However, we also agree with the district court that the Appellees have standing to
challenge the amendments as a whole. As explained above, the Association intended to
establish a single, unified set of covenants applicable to the entire subdivision.
Consistent with the Association’s approach, the Appellees explicitly challenged the
amendments as a whole, and as they applied to all of the property in the subdivision. For
example, the Appellees alleged in their complaint that, “As owners in Plats 1, 2 and 3 did
not approve to amend their Covenants, it is not possible to have a uniform set of
Covenants for all twenty one (21) plats within the Star Valley Ranch Association
rendering the vote for the amendment for any of the plats a nullity.” The Appellees
explicitly challenged the amendments as a single, unified set of covenants applicable to
the entire subdivision, and their ownership of property in the subdivision gave them
standing to do that.
[¶35] Affirmed.
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