MORETTO v. ELK POINT COUNTRY CLUB HOA, INC.
2022 NV 24
| Nev. | 2022Background
- Elk Point Country Club Homeowners Association (EPCC) is a recorded common-interest community formed in 1925; its recorded bylaws include an Article 16(3) requiring board approval of plans before any structure is erected on individual lots.
- Jerome Moretto purchased a lot in Elk Point in 1990; his title is subject to EPCC's recorded bylaws and rules.
- In 2018 EPCC's board adopted an architectural review committee and detailed "Architectural and Design Control Standards and Guidelines" regulating height, setbacks, materials, landscaping, lighting, and plan submission procedures.
- Moretto sued for declaratory and other relief, arguing the new guidelines exceeded EPCC's rulemaking authority; EPCC defended based on its bylaws and general rulemaking power.
- The district court granted summary judgment for EPCC; on appeal the Nevada Supreme Court (1) adopted Restatement (Third) of Property: Servitudes §§ 6.7 and 6.9 limiting implied association powers and requiring express authority for design controls, and (2) held Article 16(3) constitutes express design-control authority but remanded to determine whether the Guidelines are reasonable.
Issues
| Issue | Moretto | EPCC | Held |
|---|---|---|---|
| Whether Nevada should adopt Restatement (Third) §§ 6.7 (use restrictions) and 6.9 (design restrictions) | Court should adopt those sections to limit implied rulemaking powers | Did not oppose adoption; relied on bylaws' text to justify rules | Court adopted §§ 6.7 and 6.9 as public-policy-consistent limits on implied association powers |
| Whether EPCC's general rulemaking clause alone authorizes the Architectural Guidelines | General rulemaking is insufficient; need express authority for design-control powers | General clause plus practice authorizes promulgation of guidelines | General rulemaking alone is insufficient under § 6.7, but not dispositive here because of Article 16(3) |
| Whether EPCC's recorded bylaws (rather than a separate CC&R declaration) can supply the required express design-control grant | Bylaws do not equal a declaration under NRS 116.037; thus no express grant | EPCC's recorded bylaws function as the declaration for this pre-1992 community | Court held EPCC's recorded bylaws (Article 16(3)) constitute an express design-control grant for this pre-1992 community and satisfy Restatement § 6.9 |
| Whether the Architectural Guidelines are valid as reasonably exercised design-control authority | Guidelines exceed authority unless expressly authorized and reasonable; they are presumptively invalid until reasonableness shown | Rules valid if within express authority and applied reasonably; burden shifts if plaintiff makes prima facie showing of unreasonableness | Court held express authority exists but remanded for district court fact-specific inquiry into the Guidelines' reasonableness; Moretto bears prima facie burden, then burden shifts to EPCC |
Key Cases Cited
- St. James Vill., Inc. v. Cunningham, 125 Nev. 211, 210 P.3d 190 (2009) (Nevada adopted Restatement section where consistent with public policy)
- Artemis Expl. Co. v. Ruby Lake Estates Homeowner's Ass'n, 135 Nev. 366, 449 P.3d 1256 (2019) (applied Restatement approach to pre-1992 common-interest communities)
- Wood v. Safeway, Inc., 121 Nev. 724, 121 P.3d 1026 (2005) (de novo review and summary-judgment standard)
- Grovenburg v. Rustle Meadow Assocs., LLC, 165 A.3d 193 (Conn. App. Ct. 2017) (enumerated factors for assessing reasonableness of design-control exercises)
- Kies v. Hollub, 450 So.2d 251 (Fla. Dist. Ct. App. 1984) (consideration of consistency with similarly situated communities in design-control disputes)
- Otak Nev., LLC v. Eighth Judicial Dist. Court, 129 Nev. 799, 312 P.3d 491 (2013) (courts evaluate substance over label of claims)