Eagle Mountain Ranches HOA lawsuit decision brings both sides to the table

Residents walk past homes in the Cold Springs homeowners association of Eagle Mountain. The HOA was part of a group awarded damages March 4 in a lawsuit against the Eagle Mountain Ranches Master Homeowners Association.

When the Eagle Mountain Ranches Master Homeowner’s Association lost the lawsuit brought against it in March, many residents belonging to the association cheered.

The lawsuit, filed by the Willow Springs, Cold Springs and Rock Creek HOAs, was decided in their favor March 4 by Judge Derek P. Pullan of the Fourth District Court. The suit awarded these HOAs – sub-HOAs of the Ranches Master HOA – damages of approximately $14 million, and about $400,000 in dues placed in escrow to be returned to the sub-HOAs.

The sub-HOAs filed the suit in reaction to 2010 actions by the Master HOA. According to Drew Curley, an Eagle Mountain resident and former board member of the Cold Springs HOA, the Ranches Master HOA passed amendments that gave its board the authority to dissolve any sub-HOAs deemed not to be doing its job. The three sub-HOAs felt the Master HOA was overstepping its authority, and banded together and hired a lawyer to look into the legality of those actions.

As they dug further, the sub-HOA’s lawyers found some other flaws. Curley said the Master HOA had never filed an official declaration to be a homeowners association.

“From what we found, we believed the Ranches never had the authority as an HOA,” Curley said.

He explained that original intent of the lawsuit, filed in May 2013, aimed to allow the three sub-HOAs the opportunity to leave the master association. He sees that happening now because of the court’s decision.

“It was never about the money. All along, we just wanted to be free, to be out of the Ranches association,” Curley said in a phone interview. “We got that in the trial ruling. As long as the Master HOA is dissolved and our attorney fees are paid, we’re happy.”

The $14 million price tag came because Judge Pullan found that the Ranches Master HOA had filed wrongful liens against all of the units under its care. There is a cost per unit to knowingly filing a wrongful lien, which Judge Pullan also found the master association guilty of. Thus, the high price tag.

Curley said the sub-HOAs are now in negotiations with the Ranches Master HOA, and may be willing to forgo some of the $14 million awarded, as long as the sub-HOAs can be independent, and the Master HOA is dissolved. He feels this is a real possibility.

“All three sub-HOAs have their own CC&Rs [Declaration of Covenants, Conditions, and Restrictions] and are self-sustaining, and they will continue. The residents see real benefit from them. We just feel the Master Association should have never existed, and residents have seen no benefit whatsoever,” he said.

Brian Haskell, community manager of the Ranches Master HOA, agreed that all the affected HOAs are currently at the negotiating table. But he disagrees with Curley’s, and possibly other residents’ sentiments.

“From inception, the Master HOA board has been looking out for the community and its homeowners out here. I would disagree that the board was looking out for any interest other than the homeowners,” Haskell said in a phone interview.

At this point, much of the discussion between the HOAs is going on behind closed doors. The Ranches Master HOA had a planned annual meeting March 23, but postponed it, in order to deal with the ramifications of the court’s ruling.

“The Board of Trustees has been working to evaluate and determine the best course of action to take based on this ruling, with the interests of each homeowner as their primary goal. As mentioned, the consequences of this ruling will likely have significant impact on the responsibilities and functionality of the Master HOA into the future,” read a statement sent to all HOA members last week. “The Board of Trustees is comprised of homeowners, who are living among you and will be impacted equally by the final determination and course of action.”

Both sides in the negotiation said they will continue to update their communities as decisions are made.

Karissa Neely reports on Business & North County events, and can be reached at (801) 344-2537 or kneely@heraldextra.com. Follow her on Twitter: @DHKarissaNeely