Heritage v. Weinberg

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UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL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

HERITAGE VILLAGE II HOMEOWNERS ASSOCIATION,
Plaintiff/Appellee,

v.

RICHARD WEINBERG, et al.,
Defendants/Appellees.
_________________________________

JOHN L. NORMAN and GERRY MOLOTSKY
Intervenors/Appellants.

No. 1 CA-CV 20-0637
FILED 10-26-2021

Appeal from the Superior Court in Maricopa County
No. CV2014-009229
The Honorable M. Scott McCoy, Judge

AFFIRMED IN PART; VACATED IN PART AND REMANDED

COUNSEL

Dickinson Wright, PLLC, Phoenix
By Scott A. Holcomb, Emily Jeffries
Counsel for Plaintiff/Appellee
Taylor Young Appeals, PLLC, Phoenix
By Taylor C. Young
Counsel for Defendants/Appellees

Fennemore Craig, PC, Phoenix
By Douglas C. Northup, Emily Ayn Ward, Taylor N. Burgoon
Counsel for Intervenors/Appellants

MEMORANDUM DECISION

Judge James B. Morse Jr. delivered the decision of the Court, in which
Presiding Judge D. Steven Williams and Judge David B. Gass joined.

M O R S E, Judge:

¶1 John Norman and Gerry Molotsky (together, "Intervenors")
appeal the dismissal of their suit against Richard and Laine Weinberg for
alleged violations of Heritage Village II's Amended and Restated
Declaration of Covenants, Conditions & Restrictions ("CC&Rs"). For the
following reasons, we affirm the dismissal, but vacate and remand the
award of attorneys' fees.

FACTS AND PROCEDURAL BACKGROUND

¶2 The Weinbergs own a home located in Heritage Village II
("Heritage"), which is part of the McCormick Ranch master-planned
community in Scottsdale. Beginning in 2013, the Weinbergs undertook to
replace their home with a larger dwelling. In July 2014, Heritage sued the
Weinbergs, alleging the changes to their lot violated the CC&Rs. The
superior court concluded the Weinbergs had violated the CC&Rs, granted
declaratory relief, and ordered the Weinbergs to take specific remedial
measures to bring their home into compliance.

¶3 Months later, the superior court noted that the parties
remained unable to agree on necessary modifications for the Weinbergs'
home to comply with the CC&Rs. Meanwhile, the membership on
Heritage's Board of Directors (the "Board") changed and the Board debated
whether to continue the litigation. In July 2017, the Board voted to settle
with the Weinbergs.

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¶4 Intervenors are homeowners and members of Heritage.
Before Heritage and the Weinbergs filed their notice of settlement,
Intervenors filed an emergency motion to intervene. Heritage and the
Weinbergs opposed Intervenors' motion. The superior court denied the
motion and awarded Heritage and the Weinbergs attorneys' fees.
Intervenors appealed. This Court reversed the superior court's ruling on
the motion to intervene, vacated the attorneys' fees award, and denied the
Weinbergs' and Heritage's requests for fees and costs on appeal. Heritage
Vill. II Homeowners Ass'n v. Norman ("Heritage I"), 246 Ariz. 567, 573, ¶ 26
(App. 2019).

¶5 After the appeal, Intervenors filed a complaint in
intervention, naming only the Weinbergs as defendants. The Weinbergs
filed a motion to dismiss for failure to state a claim, which Heritage joined.
The superior court granted the motion and awarded Heritage and the
Weinbergs attorneys' fees. Intervenors timely appealed, and we have
jurisdiction under A.R.S. § 12-2101(A)(1).

DISCUSSION

¶6 We review a dismissal for failure to state a claim de novo.
Coleman v. City of Mesa, 230 Ariz. 352, 355, ¶ 7 (2012). Dismissal for failure
to state a claim is appropriate if "as a matter of law . . . plaintiffs would not
be entitled to relief under any interpretation of the facts susceptible of
proof." Fid. Sec. Life Ins. Co. v. Ariz. Dep't of Ins., 191 Ariz. 222, 224, ¶ 4 (1998).
In reviewing the dismissal, we "look only to the pleading itself" and
"assume the truth of the well-pled factual allegations" contained within.
Cullen v. Auto–Owners Ins. Co., 218 Ariz. 417, 419, ¶ 7 (2008). "However, we
do not accept as true allegations consisting of conclusions of law, inferences
or deductions that are not necessarily implied by well-pleaded facts,
unreasonable inferences or unsupported conclusions from such facts, or
legal conclusions alleged as facts." Jeter v. Mayo Clinic Ariz., 211 Ariz. 386,
389, ¶ 4 (App. 2005).

I. Alleged CC&Rs Violations.

¶7 We consider on appeal whether Intervenors failed to state a
claim that the Weinbergs are in violation of the CC&Rs. Covenants and
deed restrictions constitute a contract between a subdivision's property
owner and individual lot owners. Ariz. Biltmore Estates Ass'n v. Tezak, 177
Ariz. 447, 448 (1993). The interpretation of a contract is a matter of law that
we review de novo. Id.

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¶8 Pertinent here, Article III of the CC&Rs provides that "no
addition, improvement, or any modification which alters the exterior
appearance of the Lot, whether a building, fence, wall, or other structure
shall be commenced, erected or maintained on any Lot until the plans . . .
have been submitted to and approved in writing by the Architectural
Committee, and the Board of Directors." The Board and Architectural
Committee ("Committee") have discretion to approve or deny these
requests. The Board and Committee can consider "the harmony and
conformity of the building with the surrounding area and the effect of such
structure or building as seen from adjacent or neighboring properties" and
"deny approval of any plans or specifications which are not, in its opinion
suitable or desirable for aesthetic or any other reasons."

¶9 The CC&Rs warn that "[a]ny exterior changes, modifications
additions or deletions must have the approval of the Architectural
Committee and Board of Directors or be subject to removal or change at the
Owner's expense." In July 2017, the Board approved a settlement
agreement with the Weinbergs. The settlement agreement required the
Weinbergs to make changes to their home, pay for cosmetic modifications
to the adjoining lot, and consent to various provisions. Upon completion
of these requirements, the Weinbergs' lot would be "deemed in compliance"
with the CC&Rs.

¶10 Intervenors argue that, despite the settlement agreement, the
Weinbergs' home will not comply with the CC&Rs because: (1) the changes
were not properly approved; and (2) the Board may not approve home
modifications that are expressly prohibited by the CC&Rs.

A. Approval of the Weinbergs' Home.

¶11 The CC&Rs give the Board final approval of home
modifications, providing that "[t]he Architectural Committee shall make its
recommendations to the Board of Directors for final approval or
disapproval." The Board voted and approved the settlement agreement.
Upon compliance with the terms of the settlement agreement, the
Weinbergs' lot would be "deemed in compliance" with the CC&Rs. The
Weinbergs have complied with the settlement agreement. Therefore, the
superior court properly found that the Board approved the Weinbergs'
home and deemed it compliant with the CC&Rs.

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B. The Weinbergs' Home Does Not Violate Article II Section
6(A) of the CC&Rs.

¶12 The Board has "the right and duty" to enforce the restrictions
in the CC&Rs and does not have discretion to approve a violation of the
CC&Rs. Thus, the Board's approval would be invalid if the Weinbergs'
home violates the CC&Rs. See Gfeller v. Scottsdale Vista N. Townhomes Ass'n,
193 Ariz. 52, 54, ¶ 11 (App. 1998) ("[W]hichever means [of enforcement] it
chooses, the Association may not forsake its express duty to enforce the
CC & Rs."). Intervenors allege the Weinbergs' home violates Article II
Section 6(A) of the CC&Rs,1 which states:

Except in the individual patio areas, no individual planting or
gardening shall be done. No hedges or walls shall be erected
or maintained upon said premises, except such as were
installed in accordance with the original construction of the
buildings. Any exterior changes, modifications additions or
deletions must have the approval of the Architectural
Committee and Board of Directors or be subject to removal or
change at the Owner's expense.

¶13 This provision restricts individual planting or gardening
outside individual patio areas as well as the erection or maintenance of
hedges or walls that were not installed in accordance with the original
construction of the buildings. The Weinbergs tore down the original
building on their property and reconstructed their new home to be larger
than the old structure. Because the rear perimeter wall of their new home
is approximately one foot beyond the rear perimeter wall of the original
building, Intervenors argue it is not "in accordance with the original
construction" of the building.

¶14 We disagree that Section 6(A) of the CC&Rs provides the
categorical prohibition urged by Intervenors. The "cardinal principle in
construing restrictive covenants is that the intention of the parties to the
instrument is paramount." Tezak, 177 Ariz. at 449. The intention of the
parties is determined by construing the document as a whole. Newmont

1 Appellees assert that this argument was waived. In Intervenors'
Reply in Support of Motion for Entry of Final Judgement, they quoted
Section 6(A) and argued the remedial measures previously ordered by the
superior court were expressly required by the CC&Rs. In the exercise of
our discretion, see Dombey v. Phx. Newspapers, Inc., 150 Ariz. 476, 482 (1986),
we do not find this argument waived.

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Expl. Ltd. v. Siskon Corp., 125 Ariz. 267, 269 (App. 1980). And "a covenant
should not be read in such a way that defeats the plain and obvious
meaning of the restriction." Tezak, 177 Ariz. at 449. Further, where
provisions are conflicting, those "apparently conflicting provisions must be
reconciled, if possible by any reasonable interpretation." Employer's Liab.
Assur. Corp. v. Lunt, 82 Ariz. 320, 327 (1957); see also Gfeller, 193 Ariz. at 54,
¶ 13 ("We will, if possible, interpret a contract in such a way as to reconcile
and give meaning to all of its terms, if reconciliation can be accomplished
by any reasonable interpretation.").

¶15 Article II of the CC&Rs contains various use restrictions. The
restrictions fall into two categories. Some restrictions provide that certain
activities and actions are prohibited without exception. For example,
Section 4 prohibits the display of "clotheslines, equipment, service yards,
[and] woodpiles" and does not provide any avenue for attaining an
exemption or waiver. Other restrictions provide that certain activities and
actions are prohibited unless the Board approves. For instance, Section 8
provides that "[n]o other exterior television, internet, radio antenna or
antenna of any sort shall be placed, allowed, or maintained upon any
portion of the improvements to be located upon the Properties, nor upon
any structure situated upon the real property, without the prior written
approval of the Board of Directors."

¶16 Moreover, Article III of the CC&Rs provides broad authority
for the Board and Committee to approve any "addition, improvement, or
any modification which alters the exterior appearance of the Lot, whether a
building, fence, wall, or other structure . . . on any Lot." Construing the
entire document, Article III and Section 6(A) of the CC&Rs permit a new
"building, fence, wall, or other structure," and "exterior changes,
modifications additions or deletions" if they are approved by the
Committee and the Board. Because the Board approved the Weinbergs'
home, it does not violate Section 6(A).

C. Other Alleged CC&Rs Violations.

¶17 The other issues alleged by Intervenors do not implicate
express provisions of the CC&Rs. The violations previously found by the
superior court were based on a failure to attain proper approval, not
express restrictions in the CC&Rs. For example, Intervenors complain the
Weinbergs' roof height is 19 feet rather than 17 feet. However, a 17-foot
requirement is not included in the CC&Rs. Instead, it is derived from the
superior court's 2015 finding that the Board and Committee had
preliminarily approved a building height of only 17 feet for the Weinbergs.

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Intervenors' argument ignores the superior court's subsequent order that
the parties could agree to keep the current height of 19 feet and create an
"aesthetic transition" between the Weinbergs' and their neighbors' rooflines.
Consistent with that invitation, the settlement agreement addressed issues
related to the Weinbergs' and an adjoining lot's rooflines.

¶18 The CC&Rs also do not expressly prohibit enlarging the
footprint of a dwelling. And, although the Board previously found the
Weinbergs' home "not aesthetically pleasing" or "consistent with the
harmony and conformity of the surrounding area" the Board-approved
changes provided in the settlement agreement addressed some of those
concerns.

¶19 Although the CC&Rs give Intervenors the right to enforce the
CC&Rs' provisions, it does not give them the ability to substitute their
evaluation and approval for that of the Board. As we noted in Heritage I,
"whether the actions to be taken pursuant to the proposed settlement
between Heritage and the Weinbergs would or would not cure any
noncompliance with the CC&Rs [was] left to the superior court in the first
instance." 246 Ariz. at 573, ¶ 24 n.5. The CC&Rs give the Committee and
the Board, not individual homeowners, the authority to approve home
modifications. Because the Weinbergs' home has now been approved by
the Board, it does not violate any express provisions of the CC&Rs, and the
superior court properly granted the Weinbergs' motion to dismiss.

II. The Superior Court's Attorneys' Fees Award.

¶20 Generally, we review a determination regarding the amount
of fees awarded for an abuse of discretion, Fisher v. Nat'l Gen. Ins. Co., 192
Ariz. 366, 370, ¶ 13 (App. 1998), and will not disturb an award of attorneys'
fees if "any reasonable basis exists" to support it, Sanborn v. Brooker & Wake
Prop. Mgmt., Inc., 178 Ariz. 425, 430 (App. 1994). However, we review the
superior court's authority to grant attorneys' fees de novo. Bennett Blum,
M.D., Inc. v. Cowan, 235 Ariz. 204, 205, ¶ 5 (App. 2014).

A. Weinbergs' Attorneys' Fees.

¶21 When a contract provides for attorneys' fees, the contract
provision will be enforced according to its terms. Berry v. 352 E. Virginia,
LLC, 228 Ariz. 9, 13, ¶ 17 (App. 2011). Further, when the contractual
provision calls for an award of attorneys' fees to the prevailing party, the
award is mandatory. See Castle v. Barrett-Jackson Auction Co., LLC, 229 Ariz.
471, 475, ¶ 17 (App. 2012).

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¶22 The CC&Rs provide that "any Owner or Owners shall have
the standing and right to enforce the provisions of [the CC&Rs] against any
other Owner or Owners, and the prevailing party or parties in action to
enforce any such provisions shall be entitled to recover from the other party
or parties its . . . reasonable attorneys' fees." Intervenors sued the
Weinbergs to enforce provisions of the CC&Rs. The Weinbergs successfully
dismissed Intervenors' claims, becoming the prevailing party. Therefore,
the award to the Weinbergs was mandatory under the terms of the CC&Rs.

B. Heritage's Attorneys' Fees.

¶23 Regarding Heritage's fees, the CC&Rs provide that "[i]f the
Association takes . . . enforcement action . . . reasonable attorneys' fees,
court costs . . . shall also be the personal obligation of the Owner or Owners
against whom such action is taken." The CC&Rs further provide that "in
the event suit is filed, the Association as the prevailing party shall be
entitled to recover . . . reasonable attorneys' fees . . . related to the
enforcement, said amounts being . . . the personal obligation of the Owner
or Owners against whom such action is taken." This provision does not
provide for an award of attorneys' fees to Heritage because Intervenors are
not "owners against whom such action is taken." Therefore, the CC&Rs do
not mandate an attorneys' fees award to Heritage.

¶24 Nonetheless, A.R.S. § 12-341.01 authorizes such an award.2
The statute provides that "in any contested action arising out of a contract,
express or implied, the court may award the successful party reasonable
attorney fees." The statute permits an award to the successful party when
the parties are adverse. Heritage asserted the Weinbergs' home was
compliant with the CC&Rs, sought to enforce the settlement agreement,
and end the litigation. Intervenors did not. See Pioneer Roofing Co. v.
Mardian Const. Co., 152 Ariz. 455, 466 (App. 1986) (noting that adverse
parties have "opposing positions or interests"); Fulton Homes Corp. v. BBP
Concrete, 214 Ariz. 566, 571–72, ¶¶ 17–22 (App. 2007) (finding a third-party
defendant and a plaintiff adverse for purposes of attorneys' fees awards
even though the plaintiff did not assert a claim directly against the third
party); Nationwide Res. Corp. v. Ngai, 129 Ariz. 226, 232 (App. 1981) (finding
parties adverse when their positions were "completely opposite"). Heritage
prevailed, and the superior court had discretion to award Heritage fees
pursuant to A.R.S. § 12-341.01. See McAlister v. Citibank, 171 Ariz. 207, 216

2 The superior court awarded fees to both parties under the CC&Rs
but noted that the fees it awarded would be the same whether granted
under the CC&Rs or § 12-341.01.

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(App. 1992) (noting that a court considers "the totality of the circumstances
and the relative success of the litigants" in determining who is a successful
party).

C. Attorneys' Fees Incurred Opposing Intervention.

¶25 In Heritage I, we determined "that [Intervenors] have met the
minimal burden for intervention of right under Rule 24(a)(2)." 246 Ariz. at
573, ¶ 24 n.5. Our prior decision vacated the previous award of attorneys'
fees to Heritage and the Weinbergs and "den[ied] the Weinbergs' and
Heritage's requests for fees and costs on appeal." Id. at ¶ 26. Nothing in
that decision prevented the superior court from granting attorneys' fees in
the future, except for the denied fees and costs incurred on that appeal. See
Raimey v. Ditsworth, 227 Ariz. 552, 561, ¶ 26 (App. 2011) (noting that upon
remand, a trial court normally has the power to determine attorneys' fees
questions and express direction in the mandate is not required for the trial
court to award fees); Nielson v. Patterson, 204 Ariz. 530, 533, ¶ 12 (2003) ("A
vacated judgment lacks force or effect and places parties in the position they
occupied before entry of the judgment.").

¶26 However, in granting Heritage's and Weinbergs' attorneys'
fees, the superior court awarded fees incurred opposing intervention. The
superior court has discretion to determine who is a successful party when
multiple claims are brought with varied success. City of Cottonwood v. James
L. Fann Contracting, Inc., 179 Ariz. 185, 194 (App. 1994). Nonetheless, we
have held that "[w]here claims could have been litigated separately, fees
should not be awarded for those unsuccessful separate and distinct claims
which are unrelated to the claim upon which the [requesting party]
prevailed." Schweiger v. China Doll Rest., Inc., 138 Ariz. 183, 189 (App. 1983).
Separate and distinct claims include those claims based upon "different
facts or legal theories." Id.; see also City of Cottonwood, 179 Ariz. at 194–95.
Generally, "where a party has accomplished the result sought in the
litigation, fees should be awarded for time spent even on unsuccessful legal
theories," but "[w]here a party has achieved only partial or limited
success . . . it would be unreasonable to award compensation for all hours
expended, including time spent on the unsuccessful issues or claims."
Schweiger, 138 Ariz. at 189.

¶27 Intervention is a distinct procedural right to become involved
in a case. See Ariz. R. Civ. P. 24(a)(2). The question of whether a party may
intervene is separate from whether the intervenor will succeed on the
merits of the case. Here, the motion to intervene was separate and distinct
from the merits of the underlying action. Because Heritage and the

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Weinbergs were unsuccessful in opposing intervention, the superior court
abused its discretion in granting fees for work done opposing the motion to
intervene. See Mills by Mills v. Freeman, 118 F.3d 727, 733 (11th Cir. 1997)
(affirming the denial of fees incurred in unsuccessful opposition to
intervention because the "intervention claim was distinct from appellant's
success" on the underlying substantive claims); see also Rum Creek Coal Sales,
Inc. v. Caperton, 31 F.3d 169, 176–77 (4th Cir. 1993) (affirming exclusion of
intervention-related fees and expenses under 42 U.S.C. § 1988 to a party
who unsuccessfully opposed intervention but later succeeded on the
merits); cf. also Summers Grp., Inc. v. Tempe Mech., LLC, 231 Ariz. 571, 574,
¶ 15 (App. 2013) (noting that "in multi-issue litigation, it is common for
attorney fees to be apportioned between successful and unsuccessful
efforts").

¶28 For these reasons, we vacate the superior court's award of
attorneys' fees.3

III. Attorneys' Fees on Appeal.

¶29 Intervenors, Heritage, and the Weinbergs request an award of
their attorneys' fees incurred on this appeal. In our discretion, we deny
both Heritage's and Intervenors' requests for fees under A.R.S. § 12-341.01.
Under the CC&Rs, as the substantially prevailing party, an award of
attorney fees to the Weinbergs is mandatory. Supra ¶ 23; see also Castle, 229
Ariz. at 475, ¶ 17 (noting "we have no discretion to deny an award
mandated by the parties' contract"). Accordingly, we award the Weinbergs
their reasonable fees upon timely compliance with ARCAP 21.

3 The record indicates that, although the superior court denied fees the
Weinbergs incurred on the prior appeal, it may have granted fees Heritage
incurred on appeal in Heritage I. On remand, the superior court should not
award attorneys' fees incurred in opposing intervention at the superior
court or on appeal.

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CONCLUSION

¶30 For the foregoing reasons, we affirm the superior court's
decision granting the Weinbergs' motion to dismiss. The awards of
attorneys' fees to Heritage and the Weinbergs are vacated and that matter
is remanded to the superior court for further proceedings consistent with
this decision.

AMY M. WOOD • Clerk of the Court
FILED: AA

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