CONSIDERED ON BRIEFS MAY 30, 2017
FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT
LAWRENCE COUNTY, SOUTH DAKOTA THE HONORABLE MICHELLE K. PERCY
A. WILDE of Wilde & Hunt, Prof. LLC Spearfish, South
Dakota Attorneys for appellants.
A. TELLINGHUISEN MICHAEL V. WHEELER of DeMersseman, Jensen
Tellinghuisen & Huffman, LLP Rapid City, South Dakota
Attorneys for defendant and appellee.
Robert and Geneieve Harlan are landowners whose land is
subject to a "declaration of covenants, conditions,
restrictions, and reservations for land[.]" On September
20, 2013, the Frawley Ranches Planned Unit Development
Homeowners Association, Inc. (HOA) filed a certificate of
renewal and amendment to the covenant with the Lawrence
County Register of Deeds. The Harlans brought this action
seeking declaratory judgment declaring the certificate
invalid because it was alleged to have been filed in
violation of the requirements established by the covenant.
They also brought a claim to quiet title to their property.
After a trial to the court, the circuit court denied the
Harlans' claims. The Harlans appeal. We affirm in part
and reverse in part.
The Harlans are joint tenants of real property located in a
planned unit development and conveyed to them by Frawley
Ranch, Inc. Their deed is subject to "The Declaration of
Covenants, Conditions, Restrictions and Reservations for Land
Owned or Possessed or Held by Frawley Ranch, Inc." The
Declaration of Covenants was recorded on September 29, 1993.
The Declaration of Covenants provided that all record owners,
excluding lessees and security interest holders, of the lots
or parcels described within the document are members of the
HOA. Among other powers, the HOA is granted the "power
to administer and enforce all provisions" of the
Declaration of Covenants. According to its terms, the
Declaration of Covenants is initially in "full force and
effect for a term of twenty (20) years" and it is:
automatically extended for successive periods of twenty (20)
years, unless there is an affirmative vote to terminate th[e]
Declaration by the then members of the Association casting
90% of the total votes cast at an election held for such
purpose within six (6) months prior to the expiration of the
initial period hereof or any extension.
Each member of the HOA is entitled to one vote for each lot
in which they hold the interest required for membership. In
the case of joint ownership of a parcel, such as the
Harlans', only one vote per individual lot or parcel is
allowed. At the time relevant to this case, there were 35
voting interests within the development; five of those
interests belonged to Frawley Ranch, Inc.
At an annual HOA meeting on June 5, 2013, the HOA discussed
amending the Declaration of Covenants so that it would
automatically extend for successive periods of five years
rather than successive periods of twenty years. It was agreed
at the HOA meeting that the vote to amend would be conducted
by email. On August 29, 2013, the HOA's secretary and
board member, Todd Knutson, emailed the members with a
proposed covenant attached. It instructed the members that
"everyone must vote to either approve or reject"
the new covenant and that they must reply to the email with
their vote. It explained that failure to reply to the email
would be considered a "NO vote." After obtaining
votes by the members, the HOA board of directors determined
that 90% of the members voted in favor of the amendment. On
September 20, 2013, it recorded an amendment extending the
Declaration of Covenants for five years. In response, the
Harlans commenced this action. They alleged that the election
to amend the Declaration of Covenants is required to occur at
either the annual meeting of the members or a special meeting
of the members and that there was not the requisite 90% of
interests voting in favor of the amendment.
After a court trial on August 22-23, 2016, the circuit court
denied the Harlans' claims for declaratory judgment and
quiet title. It issued findings of fact and conclusions of
law. It determined that the Declaration of Covenants did not
require that an election for amending the Declaration of
Covenants be held at a meeting of the members or in person
and therefore an email vote was proper. In its findings of
fact 24 and 25, the court found:
24. There were a total of 35 votes.
25. There were 32 'yes' votes and three 'no'
votes. The affirmative vote percentage in favor of the
amendment was 91.43%.
it determined that Frawley Ranches had proven the affirmative
defenses of waiver, laches, and estoppel. The Harlans appeal
to this Court raising three issues. They contend the circuit
court erred by determining: (1) that the email vote was a
valid and binding vote; (2) that the affirmative defenses of