Summary 2010 Wy 158

Summary of Decision December 7, 2010

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Case Name: Steiger v. Happy Valley Homeowners Association

Citation: 2010 WY 158

Docket Number: S-07-0260, S-09-0081

URL: http://tinyurl.com/2dmtq96

Appeal from the District Court Laramie of County, Honorable Peter G. Arnold, Judge

Representing Appellants (Defendants): Peter B. Steiger and Sylvia Steiger, pro se

Representing Appellee (Plaintiffs): William D. Bagley of Frontier Law Center, Cheyenne, Wyoming

Date of Decision: December 7, 2010

Facts: Appellants owned a tract of land in a subdivision governed by restrictive covenants. The Appellee filed a complaint against them alleging that they were violating the covenant prohibiting homeowners from occupying a modular or mobile home without a permanent foundation. The district court granted summary judgment for the Appellee and the Appellants appealed. The Court reversed the summary judgment and remanded the case to the district court after concluding that by failing to timely respond to a request for admission, the Appellee was deemed to have admitted it lacked the authority to bring the legal action. On remand, the district court entered an order allowing the Appellees to withdraw the admission and submit a response. The district court also entered an order awarding the Appellants the costs for the appeal. The Appellants appealed both orders. The appeal from the order allowing withdrawal of the admission as an improper interlocutory appeal was dismissed. The appeal from the order awarding costs because a trial had been held in the interim and another appeal from the district court judgment seemed likely was stayed. As anticipated, the Appellants have appealed the district court’s judgment enforcing the covenant and dismissing their counterclaims.

Issues: Whether the district court erred in allowing the Appellee to withdraw its admission and respond to the discovery request. Whether the district court’s findings were supported by the evidence. Whether the district court was prejudiced or biased against Appellants or unfairly failed to require Appellees to comply with the Wyoming Rules of Civil Procedure.

Holdings: District courts have broad discretion to manage pretrial discovery matters. Therefore, a district court’s decision on a motion to withdraw or amend admissions under W.R.C.P. 36(b) is reviewed under an abuse of discretion standard. An abuse of discretion occurs when a court acts in a manner which exceeds the bounds of reason under the circumstances. In determining whether there has been an abuse of discretion, the ultimate issue is whether or not the court could reasonably conclude as it did.

Appellants served their request for admissions on August 19, 2004. The Appellee did not serve written answers to the requests until September 24, 2004, and there is no indication the district court allowed the Appellee additional time to serve its answers. Thus, in Steiger v. Happy Valley Homeowners Association (Steiger I) 2007 WY 5, 149 P.3d 735 (2007) it was held that the Appellee admitted that it was not legally constituted and that any action the Board might have taken to authorize this suit was invalid. Without proper authorization, the Appellee lacked capacity to prosecute the suit. On remand to the district court, the Appellee filed its motion for an order allowing it to withdraw its admissions and serve responses. In its motion, the Appellee cited the provision in W.R.C.P. 36(b) allowing the court to permit withdrawal or amendment of admissions and asserted that its original responses to the eighty-eight requests for admission, which it served within a week after the thirty day time period, were late because of the volume of Appellants’ discovery requests. After considering the parties’ respective arguments, the district court granted the motion, allowing the Appellee to withdraw its admissions and serve responses.

Appellants contend the order allowing the withdrawal is contrary to the authorization in W.R.C.P. 6(b) allowing the district court to enlarge the time prescribed in other rules only when the request is made before expiration of the period prescribed or when the request is made after expiration of the time and excusable neglect is shown for the failure to act within the time prescribed. The difficulty with Appellants’ argument is that it requires a limiting of the language in Rule 36(b) expressly authorizing the district court to permit withdrawal or amendment of admissions “when the presentation of the merits of the action will be subserved” and “the party who obtained the admission fails to satisfy the court that withdrawal or amendment will prejudice” them. Allowing the Appellee to withdraw its admission and serve its response promoted presentation of the merits of the controversy. Denying the motion would have prevented presentation of the case. Allowing the withdrawal simply placed the burden back where it belonged on the Appellee to prove it was authorized to bring the enforcement action.

Appellants maintain that they relied on the admission for two and a half years and the amount of time a party relies on an admission is a key factor in showing prejudice. The amount of time a party relies on an admission may be an important factor in determining prejudice. Under the facts of this case, however, the reliance factor does not outweigh the preference for deciding a controversy on its merits. Much of the time that passed between the deemed admission and the Appellee’s request to withdraw it resulted from Appellants’ appeal to this Court from the district court’s summary judgment order, time that is not attributable to any action or inaction on the Appellee’s part. The record does not indicate any reliance left Appellants unprepared for trial. To the contrary, the record suggests Appellants were well prepared for trial and had spent untold hours preparing to defend against the Appellee’s claim. The district court could reasonably have concluded as it did that allowing withdrawal of the admission would further resolution of the controversy on the merits and not prejudice Appellants. There was no abuse of discretion in the order granting the motion.

The first finding Appellants assert is not supported by the evidence is the finding that the Appellee’s action was duly authorized by its members. However, from the evidence, the court was not left with the definite and firm conviction that the district court committed a mistake in finding that legal action against Appellants was duly authorized by the Appellee members. Three past or current board members testified that they believed a quorum was present, and the testimony of one of those witnesses went unchallenged. Although Appellants were able to raise a doubt on cross-examination about whether ten percent of the lot owners were present, it cannot be said that doubt was sufficient to overcome the other testimony. In light of the other testimony and the fact that the district court had the opportunity to observe the witnesses and assess their credibility, the district court’s finding was not clearly erroneous.

Appellants also contend the district court’s finding that the Appellee did not abandon the covenants by failing to uniformly enforce them was clearly erroneous. Appellants assert that they provided evidence of numerous violations by other lot owners that the Appellee allowed to go uncorrected, thereby proving the covenants were abandoned. A protective covenant is abandoned by failure to enforce it when it is violated, the violations are ignored or acquiesced to, and the violations are “so great, or so fundamental or radical as to neutralize the benefits of the restriction to the point of defeating the purpose of the covenant. In other words, the violations must be so substantial as to support a finding that the usefulness of the covenant has been destroyed, The evidence presented in this case does not support Appellants’ contention that the other violations were so substantial that the Appellee effectively had abandoned the covenants.

Appellants further contend the district court displayed bias and prejudice against them, decided every issue in favor of the Appellee and required them to comply with the Wyoming Rules of Civil Procedure while not requiring the Appellee to do so. Prejudice is prejudgment or the forming of an opinion without sufficient knowledge or examination; bias is a leaning of the mind or an inclination toward one person over another. Mere allegations will not suffice to show bias or prejudice; the party alleging a claim of bias or prejudice must present specific facts showing prejudgment or a leaning of the mind to the extent that the district court’s decision was based on grounds other than the evidence before it. The fair meaning of any remark made by the trial judge must be interpreted in light of the context in which it was made. A review of the entire record designated in this case, and the comments of the district court in the context in which they were made, indicate that Appellants have not shown the district court was biased or prejudiced. That is, they have not shown the district court formed an opinion about the claims without sufficient knowledge or information, or had leanings in favor of the Appellee and against them. They have not shown the district court’s findings were based on grounds other than the evidence before it. While it is clear from the record that the district court was frustrated at times with both parties, it is equally clear that the court went out of its way to allow the parties, and particularly Appellants, to present their evidence and defend fully against the claim that they violated the covenant.

Affirmed.

J. Kite delivered the opinion for the court.

J. Voigt filed a specially concurring opinion. I concur in the result reached by the majority, but I write separately because, although I agree with the majority’s treatment of the district court’s granting of the Appellee’s motion to withdraw the admission, I have a concern with something not even mentioned in the opinion. The appellants clearly violated that rule and W.R.A.P. 3.05(b) when, in filing their Designation of Records for Transmittal on Appeal, they included no portion of the trial transcript. That bears repeating more simply: there is no transcript of the trial evidence in the record. Without a trial transcript, there is nothing before us from which we can ascertain that a factual finding of the district court is or is not clearly erroneous. I would summarily affirm for that reason.

J. Hill dissented with whom J. Golden, joined. I dissent because I am convinced the majority fails to rely on the “best evidence” available to the Court, in resolving the only thorny issue in this case. From the outset, Appellants contended that the Appellee did not have the legal authority to pursue this action. As is often the case with such Appellees, it is sometimes difficult to get out “the base” when it comes time to vote. However, the Appellee only needed 10% of the lot owners in order to constitute a quorum. There were 95 lots, so rounding off (and upward) it took 10 lot owners to constitute a quorum. The best evidence of attendance was the minutes of the critical meeting and those minutes reflected that 13 “persons” were present. Appellee testified that most were couples who represented only a single lot. The president agreed that that would not amount to 10 lots, which is the absolute minimum needed to conduct such serious business. Despite “memory” testimony somewhat to the contrary, I believe Appellants were entitled to rely on the official records of the Appellee since such records existed, rather than on the vagaries of memory. I would reverse and remand this case to the district court with instructions that the complaint be dismissed.