Hi-Country Property Rights Group v. Emmer
2013 UT 33
| Utah | 2013Background
- Hi-Country Estates HOA Phase II is a Utah nonprofit responsible for road maintenance funded by assessments; a five-member board allocated maintenance funds and potential preferential road improvements; derivative plaintiffs allege the directors prioritized their own properties; the directors appointed a special committee under Utah Code 16-6a-612(4) to assess whether the derivative suit should be dismissed; the committee, comprised of two current directors and one former director who owned affected lots, issued a report leading the board to seek dismissal; district court granted dismissal applying a summary-judgment standard, and plaintiffs appealed alleging the committee was not independent under §16-6a-612(4).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Independence standard under §16-6a-612(4)(b) | Committee members were not independent due to ownership and connections. | Committee members were sufficiently independent under the statute. | Remand required; independence not properly determined on record. |
| Use of summary judgment to decide independence | District court misapplied summary judgment to a fact-intensive issue. | Rule 56(e) supports disposition when no genuine issues exist. | Summary judgment inappropriate; remand for factual determination. |
| Role of committee versus board under §16-6a-612(4)(a) | Committee, not board, must determine best interest and recommend dismissal. | Board action could implement committee recommendation. | Committee must independently recommend dismissal on remand. |
| Personal benefit and potential conflicts | Committee members’ property ownership along affected roads created personal benefit/conflicts. | No conclusive evidence of such taint on independence. | Factual questions unresolved; remand to assess personal benefit. |
Key Cases Cited
- Einhorn v. Culea, 612 N.W.2d 78 (Wis. 2000) (independence not shown by one factor alone; need case-specific balance)
- Janssen v. Best & Flanagan, 662 N.W.2d 876 (Minn. 2003) (independent directors and SLC standards; multi-factor analysis)
- Hirsch v. Jones Intercable, Inc., 984 P.2d 629 (Colo. 1999) (policy on independent decision-makers in derivative actions)