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Arbors at Sugar Creek Homeowners Ass'n v. Jefferson Bank & Trust Co.

Supreme Court of Missouri, En Banc

June 30, 2015

THE ARBORS AT SUGAR CREEK HOMEOWNERS ASSOCIATION, ET AL., Appellants/Cross-Respondents,
v.
JEFFERSON BANK & TRUST CO., INC, Respondent/Cross-Appellant, and MCKELVEY HOMES, LLC, Respondent

Page 178

[Copyrighted Material Omitted]

Page 179

APPEAL FROM THE CIRCUIT COURT OF ST. LOUIS COUNTY. THE HONORABLE GLORIA C. RENO, JUDGE.

The homeowners were represented by Mark B. Leadlove, Daniel M. O'Keefe and Christopher M. Blaesing of Bryan Cave LLP in St. Louis.

Jefferson Bank was represented by Richard A. Ahrens of Lewis Rice LLC in St. Louis.

McKelvey was represented by J. Vincent Keady Jr. of Stinson Leonard Street LLP in St. Louis.

The Missouri Bankers Association, which submitted a filing as a friend of the Court, was represented by Keith A. Thornburg of Jefferson City.

Zel M. Fischer, Judge. Russell, C.J., Breckenridge, Stith, Draper and Wilson, JJ., concur; Teitelman, J., dissents in separate opinion filed.

OPINION

Page 180

Zel M. Fischer, Judge.

The Arbors at Sugar Creek (" the Arbors" ) is a subdivision in Des Peres, Missouri. Evolution Development LLC (" Evolution" ) purchased the land to create the Arbors through loans provided by Jefferson Bank & Trust Company (" Jefferson Bank" ). Evolution built and sold homes on five of the 18 lots in the Arbors. Prior to building the first home, Evolution recorded a Declaration of Covenants, Conditions and Restrictions (" Indenture" ) to run with the land. Pursuant to that Indenture, Evolution also established a homeowners association to govern the Arbors. Part of the homeowners association's responsibility was ensuring that homes built in the Arbors met certain standards, described in the Indenture.

During the financial crisis, Evolution declared bankruptcy and Jefferson Bank foreclosed. Prior to the bankruptcy, Evolution had failed to file the proper paperwork with the Missouri Secretary of State, and the homeowners association was administratively dissolved. After the foreclosure, Jefferson Bank partnered with McKelvey Homes, LLC (" McKelvey" ) to finish building homes on the remaining 13 lots in the Arbors. The existing homeowners deemed those building plans in violation of the Indenture and established a replacement homeowners association, The Arbors at Sugar Creek Homeowners Association (" plaintiffs' HOA" ), in an effort to stop McKelvey from building. Once created, the homeowners expelled Jefferson Bank from the association, and issued a statement to McKelvey that its homes were not in compliance with the Indenture.

After being expelled from the plaintiffs' HOA, and obtaining the declarant rights from Evolution, Jefferson Bank sent notice to all the lot owners of the Arbors and called a meeting to establish a separate homeowners association, The ASC Homeowners Association, Inc. (" ASC HOA" ). Jefferson Bank, as owner of 13 of 18 lots, used its majority position to make ASC HOA the authorized homeowners association of the Arbors and elect its board. The homeowners refused to participate in the authorization or election. Jefferson Bank also used its majority share to amend the requirements of board membership of the ASC HOA, and the board approved McKelvey's building plans, as required by the Indenture.

The homeowners filed suit against McKelvey and Jefferson Bank seeking declaratory and injunctive relief as well as alleging claims of damages against ...


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