Opinion
NO. 2012-CA-001496-MR
06-28-2013
BRUSH MOUNTAIN FARMS HOME OWNERS ASSOCIATION, INC. APPELLANT v. BRUSH MOUNTAIN FARMS PROPERTY OWNERS ASSOCIATION, INC. APPELLEE
BRIEF FOR APPELLANT: John M. Gambrel Melissa R. Dixon Pineville, Kentucky BRIEF FOR APPELLEE: F. Allen Lewis Pineville, Kentucky
NOT TO BE PUBLISHED
APPEAL FROM BELL CIRCUIT COURT
HONORABLE ROBERT V. COSTANZO, JUDGE
ACTION NO. 10-CI-00352
OPINION
AFFIRMING
BEFORE: COMBS, MOORE, AND TAYLOR, JUDGES. MOORE, JUDGE: The Brush Mountain Farms Home Owners Association, Inc. ("the HOA"), moved the Bell Circuit Court to hold appellee, Brush Mountain Farms Property Owners Association, Inc. ("the POA") in contempt of court. The Bell Circuit Court entered an order overruling its motion. The HOA then moved for the circuit court to make additional findings of fact in support of the aforementioned order. The circuit court denied the HOA's latter motion. The sole issue on appeal is whether the circuit court erred when it refused to make the findings of fact requested by the HOA. Finding no error, we affirm.
FACTUAL AND PROCEDURAL HISTORY
The factual and procedural history of this case and the arguments presented by the parties to this appeal are largely detailed over the course of three circuit court orders and four motions of record, beginning with an unappealed order that the circuit court entered on February 24, 2011. It provides in relevant part:
1. This Declaratory Judgment action was filed to determine the proper entity to administer the affairs of the association of property owners of Brush Mountain Farms (the "Association"), a subdivision located in Bell County, Kentucky.
2. From the beginning of the subdivision, the defendant, Diversified Investments & Developments, LLC ("Diversified") controlled the association, but has now relinquished control, as evidenced by the Transfer of Control executed by Diversified on December 13, 2010, a copy of which is filed of record in the Bell County Court Clerk's Office in Miscellaneous Instrument Book 22, page 565.
3. The defendant, Brush Mountain Farms Home Owners Association, Inc. ("HOA") was organized in July, 2007. However, during the time that it has been organized and properly licensed to do business in Kentucky, the HOA has undertaken little or no activity that would normally be expected of an association of property owners. The HOA has failed to (a) schedule and hold meetings for the property owners; (b) publish by-laws; (c) arrange for the
election of officers and directors; (d) account for Association fees; and (e) organize and manage an efficient association of home and property owners.
4. In light of the above-cited failures of the HOA, a group of Brush Mountain Farms property owners organized the plaintiff, Brush Mountain Farms Property Owners Association, Inc. ("POA") on May 13, 2010. The POA has pledged to manage the association in accordance with the Declaration of Covenants and Restrictions ("Declarations") for the Brush Mountain Farms community, which Declarations are on file in the Bell County Court Clerk's Office.
5. The HOA contends that its failure to act as described above was due to the fact that Diversified continued to administer the Association, and only recently relinquished that control. The Court finds this explanation to be plausible.
. . . .
7. Because the HOA has already begun collection of 2011 Association dues, the Court hereby designates the defendant, Brush Mountain Farms Home Owners Association, Inc., as the entity to contact Association members, to collect Association dues, and to otherwise administer and carry out the duties and responsibilities of the Association, all as prescribed in the Declarations of Covenants and Restrictions described above.
8. However, because of the concerns raised in the plaintiff's Motion, the Court hereby declares that all current officers and directors of the HOA are hereby discharged from their respective positions. Two (2) people are to be designated, one by the plaintiff and one by the defendant. These individuals, who must be Association members, as defined in the Declarations, shall contact all Association members and arrange for the nomination and election of new Association officers, as called for in the Declarations. Any Association member, including those just discharged by the Court, are eligible for nomination and election.
On March 22, 2012, Diversified and HOA moved the circuit court to hold POA in contempt of the February 24, 2011 order. In relevant part, their joint motion stated:
1. That pursuant to the court's Order of February 24, 2011, [POA] and [HOA] were to designate one (1) member of the Association, contact all Association members and arrange for the nomination and election of new Association officers.
2. That on January 7, 2012, [POA] held an organized meeting and elected a new Board of Directors to replace the Brush Mountain Home Owner's Association without abiding by the court's Order for each party to designate one (1) member of the Association to arrange for the nomination and election of new Association officers. Attached hereto is a copy of that correspondence initiated by [POA] which failed to comply with the aforesaid Order.[ ]
3. Also attached hereto is an Affidavit of [HOA's] representative, Alex Carroll, depicting what actions were taken in efforts to comply with the subject Order.
WHEREFORE, [Diversified and HOA] pray for [POA] to be held in contempt of court and for the newly elected members to be discharged and the parties be ordered to abide by the court's original Order of February 24, 2011.
As this motion appears in the record before us, no copy of any correspondence is attached to it.
In his affidavit, which is referenced by and attached to this motion, Carroll avers that he was the HOA's designee pursuant to paragraph 8 of the circuit court's February 24, 2011 order and that the POA's designee, Jesse Burchett, had essentially excluded him from participating in the process of nominating and electing new association officers.
POA and HOA made no formal or written designation of any individual to represent their respective interests, but both entities concede that Alex Carroll was HOA's designee and Jesse Burchett was POA's designee.
In response to the HOA's motion for contempt, the POA acknowledged that the circuit court's February 24, 2011 order had directed the POA and HOA to respectively designate two individuals to contact all association members and arrange for the nomination and election of new association officers. Furthermore, the POA acknowledged that its designee, Jesse Burchett, had arranged for the nomination and election of new association officers without the assistance of the HOA's designee, Alex Carroll. However, the POA asserted that the HOA's failure to participate in the process was not the result of the POA's willful noncompliance with the circuit court's order, but rather Alex Carroll's refusal to cooperate. To this effect, the POA's response stated:
Jesse Burchett files herewith his own Affidavit, attached hereto as Exhibit "A", refuting the contentions of Alex Carroll and contending that Alex Carroll would not cooperate. The Carroll-Burchett "negotiations" continued for over eight (8) months, into the Fall of 2011, with little or no progress toward establishing a meaningful and effective association of property owners, as envisioned by this Court's equitable ruling on February 24, 2011. As a result, all Brush Mountain Farms property owners continued to suffer, just as they had since 2004. They still didn't have paved roadways. They still didn't have water or electrical service to all of the lots. They still didn't have fire hydrants. They still didn't have any of the amenities that were promised by Diversified and depicted on Brush Mountain advertisements. They still didn't have an association that
could collect dues and offer some hope that these services might eventually become a reality. There was still no acting association, even though the Declaration of Covenants, initially filed by Gibbs[ ] and Diversified in 2004, stated that an association would be created prior to the sale of any lots in the Brush Mountain Farms subdivision, which sales began in 2004.
. . . .
A group of property owners, including Jesse Burchett, did initiate a Board election process in October, 2011 by notifying all known property owners, including Alex and Dana Carroll, and soliciting volunteers who would be willing to serve as a director. The election process culminated in early December, 2011 with the election of the initial Board of Directors of the HOA. The meeting on January 7, 2012 was a meeting of the elected directors.
The Carrolls clearly had notice of the election process. Attached hereto as Exhibit "B" is an October 27, 2011 email from Jesse Burchett to a number of property owners, including Alex and Dana Carroll, in which Burchett discusses a pending mailing, and goes on to solicit voluntary nominations for board positions. Attached as Exhibit "C" is a November 4, 2011 facsimile transmission from Laura Dana Carroll sending her attorney, Scott Wilder, a copy of the October 27, 2011 mailing from Jesse and Trish Burchett. There can be no dispute that the Carrolls received timely notice of the election process and simply chose not to participate.
. . . .
In summary, Jesse Burchett and the other participating property owners have substantially complied with the terms and spirit of the February 24, 2011 Order entered herein. All they have done is elect an initial group of directors to administer the HOA. 141 notices were mailed out and 39 of the property owners bothered to participate in the election process. Twenty-eight percent
(28%) participation is actually not too bad given the history of the Brush Mountain Farms subdivision. . . .[ ]
According to the record, J. Christopher Gibbs was the manager of Diversified Investments & Developments, LLC.
Each of the exhibits discussed in this affidavit accompanied POA's response, and the POA's response accurately describes them. The relevant substance of Burchett's affidavit is as follows:
2. I have attempted to work in association with Alex Carroll in the establishment and operation of the Brush Mountain Farms Home Owner's Association ("HOA") in accordance with the February 24, 2011 Order of the Bell Circuit Court.
3. In email correspondence dated March 4, 2011, Alex Carroll informed me that he had "3 people that have to stay on the board" of the HOA.
4. I advised Alex that this was not in accordance with the Association requirements as set forth in the Declarations of Covenants and Restrictions recorded in the Bell County Court Clerk's Office, and then I sent an email dated March 4, 2011 to all known Brush Mountain property owners seeking volunteers to serve on the HOA board.
5. Following this exchange, Alex basically ignored me. I continued to email Alex to attempt to gain his cooperation, but he continued to ignore me.
6. Finally, on October 27, 2011, with absolutely no cooperation from Alex Carroll, who refused to participate, I put together a list of property owners who had volunteered to serve on the board and mailed this list, along with a cover letter, to all known property owners, using a list of Brush Mountain property owners/addresses provided to me by Joe Williamson, a former owner. A total of 141 owners, including Alex and Dana Carroll, were notified. We received 39 responses voting for a slate of 7 directors, and on December 1, 2011, we declared the voting closed and named William Bobo, Megan Jarnigan, Jesse Burchett, Bruce Damrow, Fred Pettingill, Robert Arbaszewski, and Walt Warren as the initial directors of the HOA. The Board held its first meeting on January 7, 2012.
On April 23, 2012, the circuit court conducted a hearing with regard to the HOA's motion for contempt, and the HOA emphasized that the basis of its motion was its assertion that the POA, through Burchett, had excluded Carroll from the nomination and election process. After considering the HOA's argument and the POA's response to it, the parties submitted this matter for a ruling based upon the HOA's motion, the POA's response, and the accompanying exhibits. The circuit court then resolved this matter through a May 3, 2012 order. Its order states:
This matter having been before the Court on the Motion to Hold Plaintiff in Contempt of Court filed herein by the defendants, Diversified Investments & Developments, LLC and Brush Mountain Farms Home Owner's Association, the Court, having heard counsel, having reviewed the entire record, and being otherwise sufficiently advised, hereby FINDS, ORDERS and
ADJUDGES as follows:
1. The group of Brush Mountain Farms property owners, led by Jesse Burchett, were in substantial compliance with the February 24, 2011 Order previously entered herein when they initiated and carried out the election of the Board of Directors of the Brush Mountain Farms Home Owner's Association in the fall of 2011, and the Court declines to discharge the individual property owners so elected.
2. The defendant's Motion to Hold Plaintiff in Contempt of Court is hereby OVERRULED.
Thereafter, HOA moved the circuit court pursuant to Kentucky Rule(s) of Civil Procedure (CR) 59.05 to alter, amend, or vacate its May 3, 2012 order. In relevant part, its motion stated:
That the Plaintiffs, led by Jesse Burchett, were not in compliance with and failed to follow the Court's Order of February 21, [sic] 2011 when they initiated and carried out the election of the Board of Directors of the Brush Mountain Farms Home Owner's Association in the fall of 2011 without the input of Alex Carroll, who was designated as a person to be involved in the election process.
The Court ruled that the Plaintiff was in substantial compliance with the previous Order of February 21, 2011; however, the Court failed to make any specific findings of fact as to whether the By-Laws where [sic] followed which cannot be determined without evidence as to an accounting which would verify or confirm to [sic] the identity of the eligible voters, who was present at the meeting, where the meeting was held, when the meeting was held, and who voted in the meeting or otherwise.
WHEREFORE, the Defendants pray that the Court state whether the Order is a final and an appealable Order, their motion be sustained and for any and all relief to which they may be entitled.
In response, POA contended that it was unnecessary for the circuit court to make the additional findings of fact called for in HOA's motion. POA argued that the only issue raised in the HOA's and Diversified's prior March 22, 2012 contempt motion was whether Alex Carroll's failure to participate in the election and nomination process provided grounds for holding the POA in contempt. The POA argued the record contained substantial evidence supporting that, in spite of Carroll's failure to participate, the POA had not willfully disobeyed the circuit court's order because it had attempted to include Carroll in the process, Carroll had received notice of it, but Carroll had refused to participate. Furthermore, the POA argued that it would be improper for the circuit court to consider whether the bylaws had been followed in the nomination and election process—inasmuch as the HOA was asserting it as a ground for either holding the POA in contempt or setting aside the election that had taken place—because the HOA had never raised it as a basis for holding POA in contempt in its March 22, 2012 motion or prior to the circuit court's May 3, 2012 order.
On August 8, 2012, the circuit court overruled the HOA's motion, and HOA filed this appeal.
Diversified chose to waive any interest it may have had in this action and was therefore not named as a party to this appeal.
ANALYSIS
On appeal, the HOA does not argue that any of the circuit court's orders in this matter are either unsupported by substantial evidence of record or manifestly against the weight of the evidence. Instead, the HOA's sole argument is that the circuit court abused its discretion because it failed to make findings of fact in its May 3, 2012 order denying the HOA's motion for contempt. In its brief, the HOA argues that such findings of facts should have detailed "how the property owners had substantially complied with the February 24, 2011 Order or which facts the trial court considered in reaching its judgment." The HOA argues that those findings should have addressed the following points: 1) why a contempt sanction against the POA was not warranted for the POA's failure to include Carroll in the nomination and election process; and 2) whether the bylaws had been followed during the nomination and election process. The HOA further argues that findings regarding the latter point would, in turn, require additional findings with respect to the identities of the eligible voters, who was present at the meeting, where the meeting was held, when the meeting was held, and who voted in the meeting or otherwise.
The POA, on the other hand, argues that the circuit court had no obligation to make any such findings. In support, the POA turns to the language of CR 52.01, which makes no reference to any requirement that a circuit court make findings of fact in response to a contempt motion. The POA argues that even if findings of fact would have been appropriate, the only ground for contempt that HOA had submitted to the circuit court was the POA's failure to include Carroll in the nomination and election process. The circuit court was therefore justified in making no findings relating to any other issue. Furthermore, the POA argues that a finding of fact is unnecessary where the record otherwise clearly demonstrates the basis of the circuit court's judgment. The POA argues that no findings were warranted because the record clearly demonstrates why the circuit court rejected the HOA's motion for contempt.
Even if findings of fact were warranted in an order either granting or denying contempt sanctions, there are situations where findings of fact are not mandated. This case presents two of those situations, both of which are touched upon in the POA's arguments in support of the circuit court's judgment.
First, it is unnecessary for the circuit court to make findings of fact regarding legal issues or arguments raised for the first time in a CR 59.05 motion if those issues and arguments could have been raised prior to the entry of judgment. Hopkins v. Ratliff, 957 S.W.2d 300, 301 (Ky. App. 1997). There is no argument within the HOA's original contempt motion regarding whether the bylaws had been followed during the nomination and election process, or with respect to the following: the identity of the eligible voters, who was present at the meeting, where the meeting was held, when the meeting was held, or who voted in the meeting or otherwise. Instead, the HOA's requests for these findings appeared exclusively in its CR 59.05 motion. The HOA certainly could have raised such arguments in its original motion for contempt. Having failed to specifically do so, the HOA failed to preserve any issue or opportunity for additional fact-finding regarding these issues.
During oral arguments on its CR 59.05 motion, HOA also contended that these additional matters warranted findings of fact because it had "implicitly" raised them in its motion for contempt. HOA makes no similar argument in its brief on appeal and, in any event, we disagree. Generally speaking, "When a movant states specific grounds for [its] motion to the trial court, the court rules on those grounds. The court's decision, then, is essentially a denial of the movant's specific argument—of the grounds argued." Fischer v. Fischer, 348 S.W.3d 582, 588 (Ky. 2011). "[S]pecific grounds not raised before the trial court, but raised for the first time on appeal will not support a favorable ruling on appeal." Id. (citations omitted). The purpose of this rule, which as noted also applies in the context of newly raised arguments in 59.05 motions, is "to apprise fairly the trial judge as to the movant's position and also to afford opposing counsel an opportunity to argue each ground before the judge makes his ruling. The attention of the trial judge can thus be focused on possible reversible errors which might otherwise be obscure with only a general motion[.]" Fischer, 348 S.W.3d at 588 (quoting Gulf Oil Corp. v. Vance, 431 S.W.2d 864, 865 (Ky. 1968) (emphasis added)).
Here, HOA's contempt motion only gave the circuit court one specific ground for holding POA in contempt (i.e., the matter of Carroll's exclusion). HOA's motion did not fairly apprise the trial judge or opposing counsel that its position also encompassed any other issues. Therefore, the circuit court was not required to make findings of fact or rule upon any other issues. Accordingly, the circuit court committed no error or abuse when it made no findings of fact regarding any additional matters.
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Second, "[i]n cases where the record is so clear that the court does not need the aid of findings it may waive such a defect on the ground that the error is not substantial in the particular case." Clark Mechanical Contractors, Inc. v. KST Equipment Co., 514 S.W.2d 680, 682 (Ky. 1974); see also Perry v. McLemore, 414 S.W.2d 141, 142 (Ky. 1967).
Here, the only issue that the HOA properly raised in this matter was whether the POA was in contempt of the circuit court's February 24, 2011 order for failing to include Carroll in the nomination and election process. No court order or party to this matter has specified the nature of the contempt at issue herein, but the relief HOA requested in its motion was coercive (i.e., "for the newly elected members [to] be discharged and the parties be ordered to abide by the court's order"). Therefore, we assume that HOA sought to have POA found in civil contempt. See, e.g., Commonwealth, Cabinet for Health and Family Services v. Ivy, 353 S.W.3d 324, 332 (Ky. 2011) ("Since this proceeding was meant to coerce Ivy's compliance with her child-support obligation and not to punish her, it was civil in nature.").
The law regarding civil contempt is as follows:
In a civil contempt proceeding, the initial burden is on the party seeking sanctions to show by clear and convincing evidence that the alleged contemnor has violated a valid court order. See, e.g., Roper v. Roper, 242 Ky. 658, 47 S.W.2d 517 (1932). If the party is seeking compensation, it must also prove the amount. Once the moving party makes out a prima facie case, a presumption of contempt arises, and the burden of production shifts to the alleged contemnor to show, clearly and convincingly, that he or she was unable to comply with the court's order or was, for some other reason, justified in not complying. Clay v. Winn, 434 S.W.2d 650 (Ky.1968). This burden is a heavy one and is not satisfied by mere assertions of inability. Dalton v. Dalton, 367 S.W.2d 840 (Ky.1963). The alleged contemnor must offer evidence tending to show clearly that he or she made all reasonable efforts to comply. Id. If the alleged contemnor makes a sufficient showing, then the presumption of contempt dissolves and the trial
court must make its determination from the totality of the evidence, with the ultimate burden of persuasion on the movant.
Id.
It is undisputed that the POA violated the circuit court's February 24, 2011 order when it nominated and elected the new Association officers. The POA's only argument in response, despite phrasing it as one of "substantial compliance," was that it was either unable to comply with the court's order or justified in not complying with it because the HOA's delegate, Alex Carroll, refused to cooperate. The evidence on either side of this issue consisted only of a few e-mails, documents and affidavits. In support, the POA offered evidence showing that it had made sustained efforts to include Carroll in the process; that its inability to elect new Association officials had caused many if not all of the problems recited in the circuit court's February 24, 2011 order to persist; and, that the POA had waited for almost a year before unilaterally initiating the nomination and election process. Consequently, the only questions that remained for the circuit court to adjudicate were: 1) Was the evidence presented by POA sufficient to dissolve the presumption of contempt and demonstrate that POA made reasonable efforts to comply with the circuit court's order? And, if so, 2) Did HOA carry its burden to persuade the circuit court, based upon the totality of the evidence, that POA should nevertheless be held in contempt?
When interpreting a judgment, "effect must be given to that which is unavoidably and necessarily implied in a judgment, as well as that which is expressed in the most appropriate language." Furlow v. Sturgeon, 436 S.W.2d 485, 486 (Ky. 1969) (citation omitted). The circuit court's denial of HOA's contempt motion unavoidably and necessarily implied that the circuit court found the evidence produced by POA sufficient to dissolve any presumption of contempt and that HOA's evidence had failed to persuade it to find POA in contempt. Stated differently, the record in this matter is clear and "this court finds no great necessity for findings of fact since there is not presented such a difficulty or inconvenience as would prevent the court from waiving the requirement." Clark Mechanical, 514 S.W.2d at 682 (internal citation omitted).
CONCLUSION
Having concluded that the circuit court was not obligated to conduct any additional fact-finding in relation to HOA's motion for contempt, we end our analysis. HOA has put forth no other arguments for our review. We therefore affirm.
ALL CONCUR. BRIEF FOR APPELLANT: John M. Gambrel
Melissa R. Dixon
Pineville, Kentucky
BRIEF FOR APPELLEE: F. Allen Lewis
Pineville, Kentucky