996 N.W.2d 329
N.D.2023Background
- Misty Waters PUD (adopted 2005; major amendment Aug. 2006) set the minimum bay setback as elevation 1640.3 (NAVD88) “as delineated by the contour line described in the approved LOMR” (the approved LOMR at adoption was the 2005 LOMR-F).
- FEMA issued subsequent LOMR-Fs (2006, 2020); Builder applied for and obtained a 2020 LOMR-F specific to Sellers’ lot; City issued a certificate of occupancy.
- Sellers built a home on a bay-front lot approved by the City and the Association’s ACC; Bergers contend the house violates the PUD setback and related covenants.
- Bergers sued Sellers, Builder, and the Association for PUD violation, breach of covenants, breach of fiduciary duty, private nuisance, and negligence; Sellers/Builder counterclaimed for defamation, interference, and negligence.
- District court granted summary judgment dismissing all claims; parties appealed.
- Central legal question: Does the PUD’s incorporated reference to "the approved LOMR" mean the LOMR in effect at adoption (2005) or the subsequently issued FEMA LOMR-Fs (e.g., 2020)?
Issues
| Issue | Plaintiff's Argument (Bergers) | Defendant's Argument (Sellers/Builder/Association) | Held |
|---|---|---|---|
| PUD setback definition | "The PUD adopts the contour line in the approved LOMR as of adoption (2005); subsequent LOMRs do not change the PUD." | "'The approved LOMR' should be read to mean the most recent FEMA-approved LOMR (2020), so Sellers' lot complies." | Court: PUD unambiguously adopts the contour in the 2005 LOMR-F; 2020 LOMR does not amend the PUD. Sellers' home violates the PUD. Reverse and remand; grant partial SJ to Bergers against Sellers; Builder not liable. |
| Exhaustion of administrative remedies | No exhaustion required because dispute is statutory/ordinance interpretation and private right of action exists in the code and covenants. | Plaintiffs must exhaust zoning/administrative remedies first. | Court: No exhaustion required; issue is statutory interpretation of an unambiguous PUD. Affirmed. |
| Breach of restrictive covenants | Association and Sellers breached covenants that incorporate the PUD setback; Bergers may sue to enforce covenants. | No breach because either PUD complied or Association has discretionary approval powers. | Court: Sellers breached the covenant by violating the PUD; grant partial SJ to Bergers vs Sellers. Association had discretionary ACC authority—no breach by Association; SJ for Association affirmed. |
| Breach of fiduciary duty (Association) | Association owed fiduciary duties to homeowners and breached them by approving the home without proper review. | No fiduciary relationship exists; business judgment rule protects ACC actions. | Court: Existence of a fiduciary relationship and breach are factual questions; genuine issues of material fact exist. Reverse SJ and remand. |
| Private nuisance | Home unlawfully interferes with Bergers’ use (PUD/covenant violation, blocked light, scenic/open-space impairment, drainage). | No actionable nuisance; no protected right to view or sunlight; no unlawful act aside from contested setback. | Court: Nuisance based on PUD/covenant violation survives vs Sellers. Claims solely for blocked light/scenic loss fail as a matter of law. Association not liable. |
| Negligence (Sellers, Association, Builder) | Defendants breached general statutory duty (N.D.C.C. §9-10-01) to abstain from injuring property; drainage/negligence claims exist. | Duties arise from contract/covenants only; Builder followed owner’s plans and is not independently liable. | Court: Genuine issues exist re drainage negligence by Sellers and negligence/breach of care by Association—reverse SJ and remand. Builder’s negligence claim fails as no independent wrongful conduct; SJ affirmed for Builder. |
| Defamation / interference / negligence (Sellers/Builder cross-claims) | Statements by Bergers/Carlson caused Starion to pause draws and harmed Builders; defamation and interference claims valid. | Statements were true or reasonably based on belief; no actionable defamation or tortious interference. | Court: Statements were not false (Sellers’ home violates PUD), so defamation and negligence claims fail; interference claims lacked proof of contract breach or independent tort — SJ for Sellers/Builder affirmed. |
Key Cases Cited
- Wheeler v. Southport Seven Planned Unit Dev., 821 N.W.2d 746 (N.D. 2012) (standard of review for summary judgment and characterization of PUDs)
- Hagerott v. Morton County Bd. of Comm’rs, 778 N.W.2d 813 (N.D. 2010) (ordinance interpretation; agency deference only for ambiguous language)
- Egbert v. City of Dunseith, 24 N.W.2d 907 (N.D. 1946) (incorporation by reference adopts the referenced law as of adoption, not subsequent amendments)
- State v. Julson, 202 N.W.2d 145 (N.D. 1972) (same principle on adopting federal definition ‘‘as of’’ enactment)
- Medcenter One, Inc. v. N.D. State Bd. of Pharmacy, 561 N.W.2d 634 (N.D. 1997) (exception to exhaustion when claim requires only statutory interpretation)
- Ceynar v. Barth, 904 N.W.2d 469 (N.D. 2017) (restrictive covenant interpretation; association discretion in enforcement)
- Palmer v. 999 Quebec, Inc., 874 N.W.2d 303 (N.D. 2016) (duty analysis in negligence; existence of duty is preliminary question of law)
- Olander Contracting Co. v. Gail Wachter Invs., 643 N.W.2d 29 (N.D. 2002) (contract breach does not automatically create a tort duty)
- Agassiz West Condominium Ass’n v. Solum, 527 N.W.2d 244 (N.D. 1995) (application of business judgment rule to association governance)