Opinion
1 CA-CV 21-0165
05-10-2022
WILLIAM J. CAMMOCK, and SUSAN A. CAMMOCK, Trustees of the WJS/SAC Trust U/A dated March 31, 2015, Plaintiffs/Appellants, v. FOOTHILLS NORTH OWNERS ASSOCIATION, INC., an Arizona nonprofit corporation; and STEPHEN SCHWARTZ and TIMMI DIANN MCDONALD, husband and wife, Defendants/Appellees.
Aspey Watkins & Diesel PLLC, Flagstaff By Whitney Cunningham, Michael Victor Counsel for Plaintiffs/Appellants Law Office of Christopher Goodman PLC, Phoenix By Christopher Goodman Counsel for Defendants/Appellees McDonalds Jardine Baker Hickman & Houston PLLC, Phoenix By Bradley R. Jardine Counsel for Defendants/Appellees Foothills North Owners Association, Schwartz
Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court
Appeal from the Superior Court in Yavapai County No. V1300CV202080151 The Honorable Michael P. McGill, Judge
Aspey Watkins & Diesel PLLC, Flagstaff
By Whitney Cunningham, Michael Victor
Counsel for Plaintiffs/Appellants
Law Office of Christopher Goodman PLC, Phoenix
By Christopher Goodman
Counsel for Defendants/Appellees McDonalds
Jardine Baker Hickman & Houston PLLC, Phoenix
By Bradley R. Jardine
Counsel for Defendants/Appellees Foothills North Owners Association, Schwartz
Presiding Judge Peter B. Swann delivered the decision of the court, in which Judge David D. Weinzweig and Judge Paul J. McMurdie joined.
MEMORANDUM DECISION
SWANN, Judge:
¶1 William and Susan Cammock appeal the superior court's dismissal of their claim against Timmi McDonald and award of attorney's fees to McDonald. For the following reasons, we reverse the court's order dismissing McDonald, vacate the award of attorney's fees to McDonald, and remand.
FACTS AND PROCEDURAL HISTORY
¶2 The Cammocks owned a home on Lot 14 in the Foothills North subdivision in Sedona, Arizona. In 2020, McDonald and her husband, Stephen Schwartz, purchased a home on Lot 15-the lot adjacent to the Cammocks' home. Schwartz and McDonald owned Lot 15 as community property with right of survivorship.
The Foothills North subdivision is subject to a Second Amended and Restated Declaration of Covenants, Restrictions and Reservations and Grant of Easements ("Declaration"). The Declaration is binding on each of the lots at Foothills North. It also creates the Foothills North Owners Association, Inc. ("Association"), in which each lot owner has membership. The Declaration provides for the enforcement of its provisions by either the Association or its members.
¶3 Seeking to improve Lot 15, Schwartz hired a surveyor to create a map to expand the existing driveway. According to the map, the new driveway would come within 50 feet of the Cammocks' property. Schwartz submitted the map to the Architectural Control Committee ("ACC"), which approved the driveway expansion on May 26, 2020.
¶4 On May 27, 2020, Schwartz emailed the Cammocks to inform them of his renovation plans. On June 11, 2020, after retaining counsel, the Cammocks informed Schwartz and the Association that the driveway expansion violated the Declaration. According to the Declaration, to alter an existing driveway the owner must submit an application to the ACC for approval that details "any required grading or excavation plans, the nature, kind, shape, materials, floor plans, location, approximate cost and sample of exterior color scheme." The Declaration also prohibits owners from building an appurtenance within 50 feet of any lot boundary. The ACC may waive this provision without the approval of the Board of Directors ("Board"), if the owner shows good cause for the location of the appurtenance. The Cammocks contended that Schwartz submitted an incomplete application for the driveway expansion and the Association failed to follow the approval process for an appurtenance within 50 feet of a lot boundary.
¶5 On June 12, 2020, Schwartz commenced construction of the driveway. After construction commenced, the ACC approved the driveway expansion again, this time with the Board's approval to waive the 50-foot prohibition because the expansion was necessary for emergency vehicles to access the property.
¶6 In July 2020, the Cammocks filed a verified complaint in the superior court against the Association, Schwartz, and McDonald alleging breach of contract and seeking temporary and permanent injunctive relief to prevent the driveway expansion. McDonald filed a motion to dismiss for failure to state a claim under Arizona Rule of Civil Procedure ("Rule") 12(b)(6). The Association and Schwartz joined her motion. The court granted the motion to dismiss as to McDonald, reasoning that there was "not any construction where [the Cammocks] would be entitled to relief under any interpretation of the facts [susceptible of] proof as alleged in the Complaint." The court denied the motion as to the remaining defendants. The court awarded McDonald her attorney's fees as the prevailing party pursuant to a provision in the Declaration.
During the pendency of the Cammocks' action, the driveway was substantially completed.
¶7 After trial, the court found that the Association violated the Declaration by failing to follow the approval process for the driveway expansion. Because the Cammocks did not present any evidence of damages, the court found that they failed to prove their breach of contract claim. After weighing the competing interests, the court entered a temporary injunction to prevent Schwartz from continuing construction on the driveway. The court stopped short of entering a permanent injunction, noting that its decision did not prevent Schwartz or McDonald from submitting a proper application for the driveway expansion nor the Association from approving the application in accordance with the Declaration. The court awarded the Cammocks their attorney's fees as the prevailing party after trial.
McDonald filed a motion to dismiss the appeal, arguing it was moot because the Cammocks' fee award was satisfied, and the temporary injunction had been dissolved. Given our reversal of the court's order dismissing McDonald, we deny the motion because the Cammocks have remaining claims against McDonald.
DISCUSSION
I. THE SUPERIOR COURT ERRED IN DISMISSING THE CAMMOCKS' CLAIM AGAINST MCDONALD.
¶9 On appeal, the Cammocks argue that they sufficiently stated a claim against McDonald for breach of contract, and the court therefore erred in granting her motion to dismiss. We review Rule 12(b)(6) dismissals de novo, assuming the truth of all well-pled factual allegations in the complaint. Coleman v. City of Mesa, 230 Ariz. 352, 355-56, ¶¶ 7, 9 (2012). We will affirm only if "as a matter of law [ ] plaintiffs would not be entitled to relief under any interpretation of the facts susceptible of proof." Id. at 356, ¶ 8 (citation omitted).
¶10 The Cammocks brought the action against Schwartz and McDonald as husband and wife. In the verified complaint, the Cammocks alleged that Schwartz and McDonald were married and owned Lot 15 as community property with right of survivorship. They alleged that the Declaration had an application and approval process for home improvements, Schwartz and McDonald submitted an incomplete application, and they continued constructing the driveway despite the Association's improper approval of their application. The Cammocks alleged that the Declaration created a contract, Schwartz and McDonald's actions breached the contract, and their breach caused damages. They sought economic damages and temporary and permanent injunctive relief to prevent Schwartz and McDonald from continuing the driveway expansion.
¶11 The Cammocks also alleged that Schwartz was the one who submitted the survey map for the driveway expansion, got approval from the ACC, and communicated with the Cammocks and the Association about the driveway expansion. The superior court dismissed the Cammocks' claim against McDonald because Schwartz took the actions related to the driveway expansion. McDonald was only included in the action because she was married to Schwartz and they owned Lot 15 as community property with right of survivorship. But this is exactly why McDonald should have been included in the action.
¶12 With certain exceptions not applicable here, all property acquired during the marriage is community property. A.R.S. § 25-211(A). Either spouse may contract debts and otherwise act for the benefit of the community, but in an action on such a debt or obligation, the spouses must be sued jointly. A.R.S. § 25-215(D).
¶13 McDonald was a necessary party to the action. Schwartz expanded the driveway to benefit Lot 15. The injunctive relief sought by the Cammocks would encumber Lot 15 by preventing the driveway expansion, and the economic damages sought would be recoverable against the community. Therefore, the Cammocks' allegations that McDonald is married to Schwartz and they own Lot 15 as community property with right of survivorship sufficiently state a claim for relief against McDonald.
¶14 McDonald argues that failing to apply for the driveway expansion that complies with the Declaration does not give rise to liability; if anything, the Association would be liable for approving a deficient application. While this might be a defense to the Cammocks' claim, it does not support the court's finding that the Cammocks failed to state a claim against McDonald. Accordingly, we reverse the court's dismissal under Rule 12(b)(6).
II. THE SUPERIOR COURT ABUSED ITS DISCRETION IN AWARDING ATTORNEY'S FEES TO MCDONALD.
¶15 The Cammocks further argue that because the court erred in dismissing their claim against McDonald, the court abused its discretion in awarding McDonald her attorney's fees. We will uphold the court's determination of which party is the prevailing party and thus entitled to attorney's fees absent an abuse of discretion. Am. Power Prods., Inc. v. CSK Auto, Inc., 242 Ariz. 364, 367, ¶ 12 (2017). The court abuses its discretion if it commits an error of law in reaching a discretionary decision. Id.
¶16 Covenants and deed restrictions create a contract between a subdivision's property owners as a whole and individual lot owners. Ariz. Biltmore Ests. Ass'n v. Tezak, 177 Ariz. 447, 448 (App. 1993). When a contract provides for attorney's 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 contract provision calls for an award of attorney's fees to the prevailing party, the award is mandatory. See Castle v. Barrett-Jackson Auction Co., 229 Ariz. 471, 475, ¶ 17 (App. 2012).
¶17 Here, the Declaration provides that the prevailing party in an action is "entitled to recover from the other party all attorneys' fees incurred." Because the court erred in dismissing the Cammocks' claim against McDonald under Rule 12(b)(6), McDonald was not the prevailing party against the Cammocks' claim. We therefore vacate the court's award of attorney's fees.
CONCLUSION
¶18 For the foregoing reasons, we reverse the court's order dismissing McDonald under Rule 12(b)(6), vacate the court's award of attorney's fees to McDonald, and remand the matter to the superior court for further proceedings consistent with this decision. The Cammocks seek an award of attorney's fees on appeal. Under the attorney's fees provision in the Declaration, as the prevailing party the Cammocks are entitled to recover their attorney's fees on appeal. Accordingly, we award the Cammocks their attorney's fees and costs upon compliance with ARCAP 21.