The Colorado Court of Appeals issued its opinion in K9Shrink, LLC v. Ridgewood Meadows Water and Homeowners Ass’n on June 9, 2011.
Summary Judgment—Declaratory and Injunctive Relief—Issue Preclusion.
Plaintiffs K9Shrink, LLC and Gail Clark appealed the trial court’s summary judgment in favor of defendant Ridgewood Meadows Water and Homeowners Association (HOA), as well as the court’s order denying declaratory and injunctive relief to plaintiffs and granting an injunction and attorney fees to the HOA. The judgment and order were affirmed.
Clark, a canine behavioral psychologist, operates K9 Shrink on her property. Clients bring their dogs to Clark’s home, where she counsels the owners on communicating with and training their dogs. Clark’s home is subject to the HOA’s Covenants (Covenants).
Clark and K9Shrink filed this action after the HOA required them to cease K9Shrink’s activities after determining they constituted commercial pet-related activity that was prohibited by the Covenants, as amended in 2007 (Amendments). Plaintiffs sought a declaratory judgment that the Amendments were unenforceable and an injunction prohibiting enforcement against plaintiffs. The HOA counterclaimed for an injunction to prevent plaintiffs from conducting their activities.
The trial court granted partial summary judgment to the HOA with respect to plaintiffs’ claim for declaratory judgment regarding the enforceability of the Covenants. Following trial, the court issued an order on January 11, 2010 (January order) determining that K9Shrink’s activities violated the Covenants and denying relief to plaintiffs. Plaintiffs appealed.
The Amendments became effective in 2007 after the district court entered an order amending the 1973 and 1977 declarations under CRS §38-33.3-217(7). Plaintiffs argued it was error for the trial court to rule that their challenge to the Amendments was barred by issue preclusion.
Issue preclusion bars the re-litigation of an issue when (1) the same issue was litigated in a previous proceeding; (2) the party against whom preclusion is asserted was a party to, or in privity with a party to, the previous proceeding; (3) that proceeding resulted in a final judgment on the merits; and (4) the party against whom preclusion is asserted previously had a full and fair opportunity to litigate the issue. [Lazy Dog Ranch v. Telluray Ranch Corp., 965 P.2d 1229 (Colo. 1998).] Plaintiffs challenged only the trial court’s application of the second and fourth Lazy Dog factors, and only as applied to Clark.
The Court of Appeals found that Clark had notice, standing, and an opportunity to be heard in the 2007 court proceeding and therefore was a party to the proceeding in which the court approved the Amendments. The Court reviewed the factors set forth in Bebo Construction Co. v. Mattox & O’Brien, P.C., 990 P.2d 78 (Colo. 1999) to determine whether Clark was given a full and fair opportunity to litigate. The Court found that, as to her declaratory judgment claim, Clark could have brought the same alleged defects in the Amendments in the 2007 case that she raised in the instant action and therefore was given a full and fair opportunity to litigate.
Plaintiffs then argued that the trial court erred in its interpretation of Part II, paragraph 5(c) of the Covenants. The Court disagreed. The Covenant at issue stated: “Commercial livestock husbandry or animal processing operations are prohibited upon any lot, as are any commercial pet-related activities, such as dog boarding kennels, catteries or commercial breeding operations.” The Court agreed with the trial court that the language prohibits a broad range of commercial pet-related activities, which would include the activities of K9Shrink.
The Court also rejected plaintiffs’ argument that it was error to grant injunctive relief to prevent them from conducting commercial pet-related activities on Clark’s property. The Court found that the trial court addressed each of the necessary findings in a well-reasoned manner. The HOA established that: (1) it has achieved actual success on the merits; (2) irreparable harm will result unless the injunction is issued; (3) the threatened injury outweighs the harm that the injunction may cause the opposing party; and (4) the injunction, if issued, will not adversely affect the public interest. The judgment and order were affirmed.