The Arbors at Sugar Creek Homeowners Association, Appellants/Cross-Respondents v. Jefferson Bank & Trust Co., Inc., Respondent/Cross-Appellant, and McKelvey Homes, LLC

SUPREME COURT OF MISSOURI
en banc

THE ARBORS AT SUGAR CREEK )
HOMEOWNERS ASSOCIATION, )
ET AL., )
)
Appellants/Cross-Respondents, )
)
v. ) No. SC94693
)
JEFFERSON BANK & TRUST CO., INC, )
)
Respondent/Cross-Appellant, )
)
and )
)
MCKELVEY HOMES, LLC, )
)
Respondent. )

APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY
THE HONORABLE GLORIA C. RENO, JUDGE

Opinion issued June 30, 2015

The Arbors at Sugar Creek ("the Arbors") is a subdivision in Des Peres, Missouri.

Evolution Development LLC ("Evolution") purchased the land to create the Arbors

through loans provided by Jefferson Bank & Trust Company ("Jefferson Bank").

Evolution built and sold homes on five of the 18 lots in the Arbors. Prior to building the

first home, Evolution recorded a Declaration of Covenants, Conditions and Restrictions

("Indenture") to run with the land. Pursuant to that Indenture, Evolution also established

a homeowners association to govern the Arbors. Part of the homeowners association's
responsibility was ensuring that homes built in the Arbors met certain standards,

described in the Indenture.

During the financial crisis, Evolution declared bankruptcy and Jefferson Bank

foreclosed. Prior to the bankruptcy, Evolution had failed to file the proper paperwork

with the Missouri Secretary of State, and the homeowners association was

administratively dissolved. After the foreclosure, Jefferson Bank partnered with

McKelvey Homes, LLC ("McKelvey") to finish building homes on the remaining 13 lots

in the Arbors. The existing homeowners deemed those building plans in violation of the

Indenture and established a replacement homeowners association, The Arbors at Sugar

Creek Homeowners Association ("plaintiffs' HOA"), in an effort to stop McKelvey from

building. Once created, the homeowners expelled Jefferson Bank from the association,

and issued a statement to McKelvey that its homes were not in compliance with the

Indenture.

After being expelled from the plaintiffs' HOA, and obtaining the declarant rights

from Evolution, Jefferson Bank sent notice to all the lot owners of the Arbors and called

a meeting to establish a separate homeowners association, The ASC Homeowners

Association, Inc. ("ASC HOA"). Jefferson Bank, as owner of 13 of 18 lots, used its

majority position to make ASC HOA the authorized homeowners association of the

Arbors and elect its board. The homeowners refused to participate in the authorization or

election. Jefferson Bank also used its majority share to amend the requirements of board

membership of the ASC HOA, and the board approved McKelvey's building plans, as

required by the Indenture.
 The homeowners filed suit against McKelvey and Jefferson Bank seeking

declaratory and injunctive relief as well as alleging claims of damages against Jefferson

Bank and McKelvey. 1 Jefferson Bank filed a three-count counterclaim petition also

seeking declaratory relief and damages against the homeowners. 2 The plaintiffs and

Jefferson Bank filed motions for summary judgment. The circuit court granted summary

judgment in favor of the plaintiffs on Counts II and III of Jefferson Bank's counterclaim

petition, and in favor of Jefferson Bank and McKelvey on Counts II-V of plaintiffs'

petition. The circuit court then held a trial on the issue of declaratory relief. After trial,

the circuit court granted declaratory relief in favor of Jefferson Bank and McKelvey.

Jefferson Bank also filed a motion for reimbursement for expenses it had incurred in

upkeep of the Arbors, which the circuit court sustained.

The homeowners appealed, and Jefferson Bank cross-appealed. The circuit court

did not err in its grant of summary judgment in favor of plaintiffs on Counts II and III of

Jefferson Bank's counterclaim petition. Nor did the circuit court err in granting summary

judgment in favor of Jefferson Bank and McKelvey on counts II-V of plaintiffs' petition.

However, the circuit court did err in sustaining Jefferson Bank's motion for

1
Plaintiff's fourth-amended petition had five counts. Count I sought a declaratory judgment and
injunction against Jefferson Bank and McKelvey, alleging that Jefferson Bank and McKelvey
had violated the Indenture governing the lots at the Arbors in multiple ways, and seeking
removal of the house that was being constructed by McKelvey. The remaining claims sought
damages under the following theories: Count II—breach of fiduciary duty solely against
Jefferson Bank; Count III—civil conspiracy against Jefferson Bank and McKelvey;
Count IV—tortious interference against Jefferson Bank and McKelvey; and Count V—nuisance
against Jefferson Bank and McKelvey.
2
Jefferson Bank's counterclaim consisted of: Count I—Declaratory relief in favor of Jefferson
Bank and McKelvey that the Indenture was not violated by McKelvey's business plan or
Jefferson Bank's actions in amending the Indenture; Count II—Slander of Title; and
Count III—Abuse of Process. Counts II and III were claims for damages stemming from the
filing of a lis pendens by plaintiffs when they filed their original petition.
3
reimbursement. The circuit court's judgment granting declaratory relief in favor of

Jefferson Bank is based on substantial evidence, was not against the weight of the

evidence, and did not err in applying or declaring the law. The judgment is affirmed in

part and reversed in part.

Factual Background

The Arbors consists of 18 lots and common ground located in Des Peres, St. Louis

County, Missouri. Evolution began its work in the Arbors in late 2005. Jefferson Bank

loaned money to Evolution to develop the Arbors and secured those loans by a deed of

trust. The Arbors is governed by an Indenture that was recorded by Evolution, with the

consent of Jefferson Bank, and that runs with the land. The Indenture required the

creation of a homeowners association. Evolution created The Arbors at Sugar Creek

Homeowners Association, Inc., ("original HOA") and initially filed the proper paperwork

with the Secretary of State of Missouri. However, Evolution never appointed board

members or had any meetings of the original HOA. Later, the original HOA was

administratively dissolved by the Secretary of State for failure to file its annual

statements.

After the administrative dissolution of the original HOA, Evolution went bankrupt

as a result of the financial crisis. Jefferson Bank foreclosed and took control of the

remaining 13 undeveloped lots in the Arbors. Jefferson Bank then sought bids from

multiple developers to complete the Arbors. Jefferson Bank's primary focus was to find a

financially sound developer that would purchase all 13 lots. Jefferson Bank eventually

4
agreed to terms with McKelvey, and the two entered into an option agreement for the

purchase of the 13 lots.

The plaintiffs disagreed with the selection of McKelvey as the developer.

Recognizing the Indenture required the homeowners association to approve McKelvey's

plans before building could begin, the plaintiffs established plaintiffs' HOA. Prior to

submission of any home plans the plaintiffs objected generally to any home that

McKelvey might build in the Arbors and filed their original petition for declaratory and

injunctive relief. The plaintiffs also filed a lis pendens to notify the public of the pending

suit.

Meanwhile, Jefferson Bank obtained an assignment of rights from Evolution and

called a meeting of all the lot owners. The Indenture provided, in article 6.1(c), that

"Each Owner's vote in the Association for all purposes shall be allocated on an equal

basis, i.e., the Owner of each Lot having one vote." At the meeting, Jefferson Bank voted

its 13 shares in favor of creating ASC HOA, and authorized it to be the official

homeowners association for the Arbors. The plaintiffs refused to participate in the vote.

Jefferson Bank then voted to appoint members to the board of ASC HOA. After offering

one of the three positions to the plaintiffs, which was refused, Jefferson Bank appointed

three of its employees to the ASC HOA board. Jefferson Bank later voted its shares to

amend the Indenture to remove the requirement that only residents of the Arbors could

serve on the board of ASC HOA. Jefferson Bank then filed a motion for partial summary

judgment that ASC HOA was the authorized homeowners association for the Arbors.

The circuit court granted that motion for summary judgment.

5
 Pursuant to the Indenture, all new homes had to be approved by the board of the

ASC HOA to ensure that those homes were in compliance with Article X of the

Indenture. Article X of the Indenture is titled, "Architectural Covenants and Design

Review." Its purpose statement provides, "This Article contains a procedure for review

and approval of exterior alterations of the original design of the buildings and Units. The

purpose of this review is to maintain the uniform quality and aesthetics of exterior

architectural design for the best interests of the Community as a whole." After hiring an

independent architect to review McKelvey's home plans for compliance with Article X,

and reviewing McKelvey's home plans itself, the ASC HOA approved McKelvey's home

plans.

The plaintiffs then filed their fourth-amended petition. Plaintiffs' petition sought

declaratory and injunctive relief that the Indenture, and specifically Article X, had been

violated. They also sought damages against Jefferson Bank and McKelvey for breach of

fiduciary duty, civil conspiracy, tortious interference, and nuisance. Jefferson Bank filed

a three-count counterclaim petition seeking a declaratory judgment in its favor and

damages against the plaintiffs for slander of title and abuse of process because of the lis

pendens filed by plaintiffs. The circuit court granted summary judgment in favor of

plaintiffs on counts II and III of Jefferson Bank's counterclaim petition and in favor of

Jefferson Bank on counts II-V of plaintiffs' petition. The circuit court also held a trial on

the issue of which party was entitled to declaratory relief. After trial, the circuit court

entered judgment in favor of Jefferson Bank and McKelvey. Jefferson Bank also filed a

motion for reimbursement after trial that was sustained by the circuit court. The motion

6
sought reimbursement in the amount of $418.27 from McKelvey and each of the

plaintiffs.

The plaintiffs appealed both summary judgments in favor of Jefferson Bank and

McKelvey and the circuit court's entry of judgment granting declaratory judgment to

Jefferson Bank and McKelvey. Jefferson Bank cross-appealed the circuit court's grant of

summary judgment in favor of the plaintiffs on its claims for slander of title and abuse of

process. After opinion by the court of appeals, this Court granted transfer. Mo. Const.

art. V, § 10.

Standard of Review

This Court reviews a grant of summary judgment de novo. Goerlitz v. City of

Maryville, 333 S.W.3d 450, 452 (Mo. banc 2011). "Summary judgment is only proper if

the moving party establishes that there is no genuine issue as to the material facts and that

the movant is entitled to judgment as a matter of law." Id. The Court views factual

assertions in the light most favorable to the non-movant and draws all reasonable factual

inferences in the non-movant's favor. Id. at 453. Summary judgment may be affirmed on

any appropriate theory supported by the record. Columbia Cas. Co. v. HIAR Holding,

L.L.C., 411 S.W.3d 258, 264 (Mo banc 2013).

This Court reviews a declaratory judgment action "the same as in any other court-

tried case." Rouner v. Wise, 446 S.W.3d 242, 248-49 (Mo. banc 2014). The circuit

court's judgment will be affirmed "unless there is no substantial evidence to support it, it

is against the weight of the evidence, or it erroneously declares or applies the law." Id. at

249 (internal citations and quotations omitted).

7
 Analysis

The principles of contract law apply when interpreting an Indenture. DeBaliviere

Place Ass'n v. Veal, 337 S.W.3d 670, 676 (Mo. banc 2011). Specifically, this Court

seeks to give effect to the parties' intent. Id. When a contract is unambiguous, the intent

of the contract is discerned solely from the contract's language. Id. at 676-77.

The homeowners raise six points on appeal arguing the circuit court erred in

denying declaratory relief and in granting summary judgment in favor of Jefferson Bank

and McKelvey on the issue of the ASC HOA being the proper homeowners association of

the Arbors, and on their claims for damages. The homeowners do not argue there are any

genuine issues of material fact in their dispute of the circuit court's granting of summary

judgment in favor of Jefferson Bank. Rather, the homeowners allege the circuit court

misapplied the law in its decisions. Jefferson Bank cross-appeals the circuit court's grant

of summary judgment on its claims for damages against plaintiffs.

Homeowners' Points on Appeal

A. ASC was the Proper Homeowner's Association for the Arbors

The homeowners argue that the circuit court erred in granting summary judgment

because Missouri law requires a successor homeowners association to receive an

assignment from the original association created pursuant to the Indenture in order to

govern. For support, homeowners rely on DeBaliviere Place Ass'n, 337 S.W.3d 670, and

Valley View Village South Improvement Ass'n, Inc. v. Brock, 272 S.W.3d 927 (Mo. App.

2009).

8
 In DeBaliviere Place, a new homeowners association was formed in 2003 to

govern a subdivision called DeBaliviere Place. 337 S.W.3d at 672-73. That new

homeowners association billed Veal for general assessments for each of his units in the

subdivision. Id. at 673. However, the new homeowners association did so prior to

receiving an assignment of rights from the former homeowners association's president.

Id. This Court held that only those assessments made after the assignment of rights were

valid. Id. at 679.

In Valley View, a successive homeowners association was formed by members of

the Valley View Village subdivision and, in the process, charged other landowners in the

subdivision assessments. 272 S.W.3d at 928-29. The successive homeowners

association sued Jarrell and Janice Brock and P. Douglas Associates, LLC. Id.

P. Douglas Associates, LLC, challenged the validity of the homeowners association to

make assessments because it had not received an assignment of the "rights, privileges,

and responsibilities declared in the original [Indenture]." Id. at 930. Although the

association was formed with a nearly identical name, unlike in Veal, it received no

assignment of rights, from either the developer or the original homeowners association.

Id. at 931. The court of appeals held that because there had not been an assignment of

rights to the successive homeowners association, it had no rights that allowed it to make

assessments. Id.

Article 3.1 of the Indenture required the creation of a homeowners association "not

later than the first conveyance of title to a Lot." While Evolution created Sugar Creek

HOA, it was administratively dissolved by the state and was incapable of revival when

9
the events that began this litigation took place. Unlike in DeBaliviere and Valley View,

there is a provision of the Indenture, in this case, allowing for amendment. Article

12.1(b) provides:

(b) By Owners. Subject to Articles IX and X, and as otherwise
provided herein, this [Indenture], including the Plat, may be amended only
by vote or agreement of the Owners of Lots to which sixty-seven
percent (67%) of the votes in the Association are allocated. No
amendment may remove, revoke, or modify any right or privilege of the
Declarant so long as Declarant's rights under Article X have not been fully
exercised, without the written consent of Declarant. No such amendment
shall reduce or modify the obligation of the Association with respect to
maintenance or the power to levy assessments therefor [sic], or to eliminate
the requirement that there be an Association and Board unless adequate
substitution is made, without the written consent of the Director of Planning
of the City of Des Peres.

(Emphasis added). Jefferson Bank owned 13 of 18 lots (72%) at the time it amended the

Indenture to make ASC HOA the official homeowners association of the Arbors. The

language of the Indenture allows for the substitution of Sugar Creek HOA with ASC

HOA because the substitution was approved by 72% of the eligible voters; therefore, the

circuit court properly granted summary judgment in favor of the defendants.

B. The Limitation on ASC HOA Board Membership was Properly Eliminated
Through Amendment of the Indenture

Article 3.5(a) of the Indenture governs qualifications and election of board

members to the homeowners association. It requires that "an Owner shall be a Member

in Good Standing who is a resident of the Community" to be a director. There is no

dispute that the members of Jefferson Bank that served on the ASC HOA were not

residents. Jefferson Bank once again used its 72% share in the subdivision to amend

Article 3.5(a) to remove the residency requirement. The homeowners argue on appeal

10
that this amendment was ineffective because it violated Jefferson Bank's duty of good

faith and fair dealing, and the amendment amounted to a "new restriction" requiring

unanimous approval to be valid. 3

i. Jefferson Bank did not Violate its Duty of Good Faith and Fair Dealing

As previously stated, the principles of contract law apply when interpreting an

Indenture. DeBaliviere Place Ass'n, 337 S.W.3d at 676. Under Missouri law, a duty of

good faith and fair dealing is implied in every contract. Farmers' Elec. Co-op., Inc. v.

Missouri Dep't. of Corr., 977 S.W.2d 266, 271 (Mo. banc 1998). However, "'there can be

no breach of the implied promise or covenant of good faith and fair dealing where the

contract expressly permits the actions being challenged, and the defendant acts in

accordance with the express terms of the contract.'" City of St. Joseph v. Lake Contrary

Sewer Dist., 251 S.W.3d 362, 371 (Mo. App. 2008) (quoting 23 Samuel Williston &

Richard A. Lord, A Treatise on the Law of Contracts § 63.22 at 516 (4th ed. 2002)); see

also Al-Khaldiya Elec. Equip. Co. v. Boeing Co., 571 F.3d 754 (8th Cir. 2009); State v.

Nationwide Life Ins. Co., 340 S.W.3d 161, 194 (Mo. App. 2011); Bishop v. Shelter Mut.

Ins. Co., 129 S.W.3d 500, 505 (Mo. App. 2004). The plaintiffs rely on Rocky Ridge

Ranch Prop. Owners Ass'n v. Areaco Inv. Co., 993 S.W.2d 553 (Mo. App. 1999), in

support of their position that Jefferson Bank violated its duty of good faith and fair

dealing.

3
The circuit court determined the period of declarant control, defined in Article 3.5(b)(1), had
not expired; therefore, Jefferson Bank could appoint members to the board as declarant. Because
the amendment eliminating the residency requirement from board requirements was proper, this
Court need not address this issue.
11
 In Rocky Ridge, a developer of a residential development sold nearly 1000 lots to

individual purchasers who were members of the owners' association. The owners'

association was governed by a restrictive covenant. The restrictive covenant could be

modified and amended "at any time by a suitable instrument executed by the Corporation

and two-thirds (2/3) of the then owners of land in Rocky Ridge . . . for the purpose of

arriving at the total number of owners of land therein, each lot shall be considered as

having one owner." Id. at 554. After a period of time, the developer controlled

approximately half the lots but wished to amend the Indenture. In an effort to obtain the

two-thirds lot ownership interest it needed, the developer plotted an additional 1150 lots

on the land it already owned. The developer then amended the covenant "without notice

to or votes from any other Rocky Ridge Ranch property owner." Id. at 555. The court of

appeals held this violated the duty of good faith and fair dealing and voided the

amendment. Id. at 556.

There was no subterfuge by Jefferson Bank in this case. It provided fair notice

and held discussion about the amendment. Further, Jefferson Bank did not divide up the

lots it owned to create the illusion that it had a 67% interest in the subdivision that would

allow it to amend the Indenture. The terms of the Indenture were followed in good faith.

The express terms of the Indenture allowed for amendment by a vote of 67% of the lot

owners, negating that implied responsibility for amendments to the Indenture. The

12
plaintiffs' comparisons to Rocky Ridge are unpersuasive, and the circuit court did not err

in granting summary judgment to Jefferson Bank on the issue of amendment. 4

ii. The Amendment did not Require Unanimous Approval

The homeowners argue they were deprived of a "right of self-governance," the

removal of which requires unanimous approval, under Missouri law. In support,

homeowners cite three cases from the court of appeals: Harris v. Smith, 250 S.W.3d 804

(Mo. App. 2008); Webb v. Mullikin, 142 S.W.3d 822 (Mo. App. 2004); and Bumm v.

Olde Ivy Dev., LLC, 142 S.W.3d 895 (Mo. App. 2004). None of these cases provide

support for the homeowners' argument that the amendment to the residency requirement

required unanimous approval of the lot owners.

In Harris, a subdivision was governed by a set of restrictive covenants. 250

S.W.3d at 806. Those covenants regulated the size of outbuildings that could be placed

on property within the subdivision. Id. Later, 13 out of 15 lot owners decided to repeal

the covenants; however, the lot owners of 6-10, with the approval of 13 of 15 lot owners,

recorded a "supplement" to the declarations stating lots 6-10 still wished to be governed

by the restrictive covenants on outbuildings. Id. at 807. Additionally, the supplement

further restricted the type of outbuilding that could be placed within the lots. Id. The

4
Judge Teitelman's dissent argues Jefferson Bank and McKelvey violated the duty of good faith
and fair dealing inherent in the Indenture. The argument that Jefferson Bank and McKelvey
failed to act in good faith goes against the factual findings of the circuit court that, "In amending
the Indenture to eliminate the residency requirement, Jefferson Bank did not engage in any sham
or manipulation to acquire the requisite number of lots to amend the Indenture. It acted in good
faith. It followed the express provisions of the Indenture." It is not this Court's prerogative to
reevaluate factual findings made by the circuit court in a court-tried case. J.A.R. v. D.G.R., 426
S.W.3d 624, 627 (Mo. banc 2014).
13
court of appeals, citing this Court's decision in Van Deusen v. Ruth, 125 S.W.2d 1 (Mo.

1938), held this constituted a "new restriction" requiring unanimous approval. Id. at 810.

In Bumm, a subdivision was governed by a restrictive covenant. 142 S.W.3d at

897. One of the lot owners of the subdivision was attempting to replat and develop the

lots inside the subdivision. Id. at 898. The lot owner's representative presented an

amendment to the covenants that would remove the redesignated land from the restrictive

covenants, however, this failed to pass. Id. Afterward, a majority of the lot owners of the

affected land passed two new covenants that did not allow land to be "replatted" and put

new architectural restrictions on buildings on the land. Id. at 898-99. The court of

appeals held these were new restrictions that required unanimous approval and were void.

Id. at 904-05.

In Webb, a subdivision had restrictive covenants that allowed the trustees of the

subdivision to make assessments against members of the subdivision. Id. at 824. The

subdivision also contained a bath and tennis club that residents were eligible, but not

required, to join. Id. The bath and tennis club was in need of improvements that were

beyond what it could afford. Id. The club contacted the trustees, who proposed an

amendment to the restrictive covenants that would cause all lot owners to be assessed $50

every year for maintenance of the club. Id. at 824-25. The lot owners who disapproved

of the amendment sued, and the court of appeals held that the amendment constituted a

new restriction requiring unanimous approval. Id. at 828.

Contrary to the homeowners' arguments, none of the cases cited lend support to

their argument. All of the court of appeals' decisions involve issues of new restrictions

14
being placed on land within a subdivision governed by a restrictive covenant, or

additional fees being imposed on lot owners within a subdivision governed by a

restrictive covenant. Jefferson Bank, in this instance, actually removed a restriction; that

members of the board of directors had to be residents. The homeowners' argument that

this amendment constituted a restriction on their "right of self-governance" is without

merit or precedent.

C. Circuit Court Properly Granted a Declaratory Judgment in Favor of Jefferson
Bank and McKelvey 5

The homeowners argue the circuit court erred in deferring to the ASC HOA

board's decisions in entering declaratory judgment in favor of Jefferson Bank and

McKelvey because those decisions were not reasonable, and the circuit court erroneously

applied the law in deciding it had to defer to the ASC HOA board. This Court defers "to

the trial court's assessment of the evidence if any facts relevant to an issue are contested."

Pearson v. Koster, 367 S.W.3d 36, 44 (Mo. banc 2012). The circuit court determined,

based on the evidence, that the ASC HOA board's decisions were reasonable and in good

faith. That decision is supported by substantial evidence, is not against the weight of that

evidence, and does not erroneously declare the law. Rouner, 446 S.W.3d at 248-49.

The circuit court was presented with four days' worth of evidence and made these

findings that counter homeowners' arguments that the ASC HOA's board decisions were

not reasonable:

5
The homeowners acknowledge in their pleadings that, if the circuit court's decision granting
declaratory relief to Jefferson Bank and McKelvey is affirmed, their claims regarding damages
are moot. Because this Court finds the circuit court did not err in entering declaratory judgment
in favor of Jefferson Bank and McKelvey, this opinion does not address the points dealing with
homeowners' damages claims.
15
 39. Members of the board, Mr. Dulle and Mr. Ross, apprised
themselves of the facts concerning the Komolos Home. They reviewed
plans. They reasonably relied on the opinions of architect Arthur
Merdinian and his reports concerning the Komolos Home being in
compliance with the Indenture. They went into the surrounding area and
found developments where mixed architectural styles and building
materials were used to determine if such diversity could co-exist in
harmony in the development. They determined that the Komolos Home,
when compared to the current homes in the Subdivision, was of uniform
quality and aesthetics.

40. They believed that the Komolos home would be aesthetically
attractive, was a quality home, and would co-exist in harmony with the
existing homes in the Subdivision. In fact, the progression of building of
homes currently in the Subdivision is such that these homes are not
identical and have both many different features and some common features.

41. They determined that a diversity of architectural styles could be
used harmoniously in the Subdivision.

42. The board, based upon the information available to the board at
the meeting and their experience, reasonably determined that the
construction of the Komolos Home would be in compliance with the
Indenture. The board, based upon the information available to the board,
also reasonably believed that its construction would not diminish the value
of the current homes in the Subdivision or the Subdivision as a whole in
accordance with the independent real estate appraiser John Neff. Mr. Neff's
appraisal of the current value of current homes in the Subdivision was
between $677,125 and $860,000. In his capacity as a member of the board,
Mr. Lemley did not present to the board any other appraisal or value
information concerning the houses in the Subdivision before the board
approved the plans for the Komolos Home. Further, Plaintiffs did not
present any countervailing appraisals at trial. The Komolos Home fits
comfortably within that range of values for the current homes, costing
approximately $835,000.00, and would have cost over $1,000,000.00 had
the Komolos family paid $400,000.00 for their lot, as did a number of the
Plaintiffs.

These factual findings support the circuit court's decision that the board of the ASC HOA

acted reasonably and in good faith in approving McKelvey's building plans.

16
 These factual findings also address the concerns of homeowners' argument that the

McKelvey's plans were in violation of Article 10's architectural requirements. Article 10

provides as its purpose that "[t]he purpose of this review is to maintain the uniform

quality and aesthetics of exterior architectural design for the best interests of the

Community as a whole." The circuit court made special note of the "community as a

whole" language of that provision, and found that the evidence and testimony presented

proved the Komolos' home was harmonious and did not violate Article 10 of the

Indenture. These decisions were supported by substantial evidence, were not against the

weight of the evidence, and do not erroneously declare the law. See Rouner, 446 S.W.3d

242.

D. The Circuit Court erred in Granting Jefferson Bank's Request for
Reimbursement

Jefferson Bank, after the trial, but prior to the circuit court's judgment, filed a

motion for reimbursement. The motion sought recovery, of expenses incurred by

Jefferson Bank for upkeep of the Arbors on a pro rata basis, from the homeowners and

McKelvey. The circuit court granted the motion over the objections of the homeowners

and ordered they each pay $418.27 as their share. This was error.

Article 6.2 provides that "Common Expenses may be assessed against one or more

Lots, and collectible as assessments under Article VII, as follows: . . . (c) Any Common

Expense or a portion thereof, the cost of which is separately metered per each Lot, may

be charged, passed through, or directly assessed to each Lot." However, under Article 7,

the ASC HOA had the exclusive ability to impose an assessment for expenses, and that

had to be done on an annual basis, through the adoption of a budget. Jefferson Bank did
17
not have the authority to determine and request a pro rata assessment of the members of

the ASC HOA, only ASC HOA, itself, had that authority. This Court reverses the

decision of the circuit court granting Jefferson Bank's motion for reimbursement.

Jefferson Bank's Cross-Appeal

Jefferson Bank cross-appeals the entry of summary judgment on its claims of

slander of title and abuse of process in relation to the filing of a lis pendens by

homeowners. Slander of title requires there be "false words that are maliciously

published, causing the plaintiff to suffer a pecuniary loss or injury." First Nat. Bank of

St. Louis v. Ricon, Inc., 311 S.W.3d 857, 864 (Mo. App. 2010). Abuse of process

requires:

A pleading alleging abuse of process must set forth ultimate facts
establishing the following elements: (1) the present defendant made an
illegal, improper, perverted use of process, a use neither warranted nor
authorized by the process; (2) the defendant had an improper purpose in
exercising such illegal, perverted or improper use of process; and (3)
damage resulted. The petition sufficiently alleges that damages resulted;
accordingly we need inquire only if it states facts satisfying the remaining
elements of the action.

The phrase “use of process,” appearing in element (1) above, refers to some
wilful [sic], definite act not authorized by the process or aimed at an
objective not legitimate in the proper employment of such process.
(internal citations and quotation marks omitted).

Ritterbusch v. Holt, 789 S.W.2d 491, 493 (Mo. banc 1990). The homeowners need only

eliminate one element of each claim to win on summary judgment, as there is no genuine

issue of material fact. See ITT Commercial Finance Corp. v. Mid-America Marine

Supply Corp., 854 S.W.2d 371, 381 (Mo. banc 1993).

The filing of a lis pendens is governed by § 527.260, RSMo 2000, which provides:

18
 In any civil action, based on any equitable right, claim or lien, affecting or
designed to affect real estate, the plaintiff shall file for record, with the
recorder of deeds of the county in which any such real estate is situated, a
written notice of the pendency of the suit, stating the names of the parties,
the style of the action and the term of the court to which such suit is
brought, and a description of the real estate liable to be affected thereby;
and the pendency of such suit shall be constructive notice to purchasers or
encumbrancers, only from the time of filing such notice.

Declaratory and injunctive relief are equitable remedies. State ex rel. Leonardi v. Sherry,

137 S.W.3d 462, 471 (Mo. banc 2004). As such, the plaintiffs were required to file a lis

pendens pursuant to § 527.260, RSMo 2000 ("In any civil action, based on any equitable

right, claim or lien, affecting or designed to affect real estate, the plaintiff shall file for

record . . . a written notice of the pendency of the suit[.]"). This requirement negates the

first element of abuse of process. Further, the filing of the lis pendens stating that a

request for declaratory relief and a permanent injunction was pending, remedies in equity,

was not "false words" negating a required element of a claim of slander of title.

Therefore, the homeowners were entitled to judgment as a matter of law and the circuit

court did not err in its grant of summary judgment in favor their favor.

Conclusion

The circuit court's judgment is affirmed in all respects, except for its granting of

Jefferson Bank's motion for reimbursement, which is reversed, and judgment is entered in

favor of the homeowners and McKelvey on that issue.

_______________________________
Zel M. Fischer, Judge

Russell, C.J., Breckenridge, Stith,
Draper and Wilson, JJ., concur;
Teitelman, J., dissents in separate opinion filed.
19
 SUPREME COURT OF MISSOURI
en banc

THE ARBORS AT SUGAR CREEK )
HOMEOWNERS ASSOCIATION, )
ET AL., )
)
Appellants/Cross-Respondents, )
)
v. ) No. SC94693
)
JEFFERSON BANK & TRUST CO., INC, )
)
Respondent/Cross-Appellant, )
)
and )
)
MCKELVEY HOMES, LLC, )
)
Respondent. )

DISSENTING OPINION

I respectfully dissent from the principal opinion to the extent it holds that

Jefferson Bank’s actions did not violate the implied covenant of good faith and fair

dealing.1 “Good faith is an ‘obligation imposed by law to prevent opportunistic behavior,

that is, the exploitation of changing economic conditions to ensure gains in excess of

those reasonably expected at the time of contracting.’” Frontenac Bank v. T.R. Hughes,

Inc., 404 S.W.3d 272, 280 (Mo. App. 2012) (quoting Schell v. LifeMark Hospitals of

1
This dissent follows the rationale of the court of appeals opinion authored by the Honorable
Lisa Van Amburg.
Missouri, Inc., 92 S.W.3d 222, 230 (Mo. App. 2002)). Missouri courts have recognized

that a party engages in bad faith by utilizing contract language allowing unilateral action

to improperly deny the other party expected benefits flowing from the contract. Koger v.

Hartford Life Ins. Co., 28 S.W.3d 405, 412 (Mo. App. 2000) (citing Martin v. Prier Brass

Mfg. Co., 710 S.W.2d 466, 473 (Mo. App. 1986) (exercising judgment “conferred by the

express terms of agreement in such a manner as to evade the spirit of the transaction or so

as to deny the other party the expected benefit of the contract” violates the duty of good

faith)). More specifically, Missouri courts have found bad faith when a developer

amends a subdivision’s declaration through a “devious attempt to circumvent” the intent

reflected in that agreement. Rocky Ridge Ranch Property Owners Ass'n v. Areaco

Investment Co., Inc., 993 S.W.2d 553, 556 (Mo. App. 1999).

The principal opinion distinguishes Rocky Ridge on grounds that Jefferson Bank’s

actions in this case did not amount to a “subterfuge.” I respectfully disagree and would

hold that, despite the factual distinctions, Jefferson Bank’s actions in this case are

functionally equivalent to the actions in Rocky Ridge. The original Indenture provided

the homeowners with the significant benefit of self-governance of the subdivision by

establishing that only residents could hold office on the neighborhood association’s board

of directors. The Indenture went on to note that the underlying purposes included

ensuring a general plan of development for the “mutual benefit” of all owners and the

participation of “every Owner” in the governance and administration of the

neighborhood. The Indenture ensured this participatory governance by specifying that

the board of directors would consist entirely of residents of the subdivision. As a result,

2
when the homeowners purchased their homes and Jefferson Bank subordinated its deeds

of trust to the Indenture, all parties held a reasonable expectation that the neighborhood

association would ultimately be governed by a board composed solely of subdivision

residents.

Jefferson Bank’s actions in amending the Indenture amounted to using its sudden

majority status to unilaterally transition from the mutually beneficial participatory

governance envisioned in the original Indenture to the exercise of authority for its own

benefit. The evidence supports this conclusion. For instance, at trial, Jefferson Bank’s

president testified that “our interests are different” from those of the homeowners. He

further testified that that Jefferson Bank’s interests were “short term.” In other words,

“[t]he market has spoken . . . the market spoke that it wanted a different kind of home

[in the subdivision].” Jefferson Bank’s actions, as clarified by the president’s testimony,

leaves little doubt that Jefferson Bank leveraged the fallout of the Great Recession to

circumvent the mutually beneficial purposes of the Indenture to satisfy its short-term

financial interests.

I would reverse the judgment granting declaratory relief to Jefferson Bank.

______________________________________
Richard B. Teitelman, Judge

3