Morris v. West Hayden Estates First Addition Homeowners Association, Inc., 2:17-cv-00018

Plaintiffs Jeremy and Kristy Morris filed FHA and Idaho Human Rights Act claims against HOA for alleged religious discrimination (filing date Jan 13, 2017).
HOA counterclaimed that Plaintiffs breached the Declaration through exterior decorating without consent, nonresidential use, nuisance, improper signs, unsightly conditions, unsafe crowding, and excessive lighting from their Christmas fundraiser.
Court previously granted Idaho HRA claims to dismissed without prejudice and denied FHA claims on Aug. 24, 2017; this order concerns the Counterclaim’s viability.
HOA seeks injunctive relief to enforce the Declaration and prevent future violations, based on alleged breaches of specific covenant provisions.
Plaintiffs moved to dismiss the Counterclaim under Rule 12(b)(6); the motion is now denied, and issues include contract interpretation and admissibility of extrinsic evidence at this stage.
The court emphasizes the pleadings standard under Twombly/Iqbal and that extrinsic evidence is generally not considered at dismissal, with some references to Rule 11 and amendment procedure still available.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Counterclaim plausibly alleges breach of the Declaration	Morris argues facts are insufficient or interpret Covenant ambiguously.	HOA asserts clear breaches of multiple Covenant provisions.	Counterclaim plausibly supports breach; dismissal denied.
Whether extrinsic evidence can resolve contract ambiguity at dismissal	Morris contends extrinsic evidence would resolve ambiguity.	Extrinsic evidence is not considered on a Rule 12(b)(6) motion.	Extrinsic evidence excluded; ambiguity unresolved; motion denied on this ground.
Whether Rule 11 sanctions are proper for alleged misrepresentations	Morris argues sanction relief is warranted for truthful disputes.	Sanctions must be separate motion and properly tailored.	Rule 11 sanctions not addressed in this order; sanctions may be pursued separately.
Whether Plaintiffs may amend the Complaint to add claims	Plaintiffs seek to add claims if possible.	Amendment must follow deadline and rules.	Amendment permitted only by separate motion, following Rule 15 and local rules.

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility, not just legal conclusions; context-specific analysis)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (claims must be plausible, not mere spheres of labels)
Johnson v. Federal Home Mortgage Corp., 793 F.3d 1005 (9th Cir. 2015) (extrinsic evidence limited at Rule 12(b)(6) stage)
Romriell v. D&M Country Estates Homeowners Ass’n, 59 P.3d 965 (Idaho 2002) (contract interpretation governs restrictive covenants; ambiguity affects construction)
Melaleuca, Inc. v. Foeller, 318 P.3d 910 (Idaho 2014) (burden to prove contract existence and breach)
Jacklin Land Co. v. Blue Dog RV, Inc., 254 P.3d 1238 (Idaho 2011) (breach of restrictive covenants supports injunctive relief)
D. & M. Country Estates Homeowners Ass’n v. Romriell, 59 P.3d 965 (Idaho 2002) (interpretation of covenants; governs contract construction)