April 2006
In This Issue:
Planned-Unit Development Is Subject to Constitutional Standards
Approval of Application for Zoning Variance Does Not Relieve Homeowners From Complying with Setback Requirements
Association Is Not Liable for Damages Sustained by Tripping Over Crack in Driveway
Association Cannot Appeal Common-Area Tax Valuation
Voting Rights Are Based on All Documents Related to Creating Association
Association Has Authority to Disconnect Electricity for Failure to Pay Assessments
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Planned-Unit Development Is Subject to Constitutional Standards
Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Association, 383 N.J. Super. 22, 890 A.2d 947 (2006)
Municipal Relations/Powers of the Association/Covenants Enforcement:  A New Jersey appeals court ruled that a planned-unit development that delivered a range of traditionally municipal services to its residents was like a town based on the New Jersey Constitution and was therefore subject to constitutional limitations and that the association's actions could not be evaluated by the business-judgment rule.



As reported in the May 2005 issue of CALR, Twin Rivers is a planned-unit development containing condominiums, townhouses, single-family homes, apartments, and commercial buildings. All property owners in Twin Rivers are members of the Twin Rivers Homeowners' Association ("association"). The plaintiffs in the case were residents of Twin Rivers, and all of the plaintiffs except one were members of an unincorporated association, the Committee for a Better Twin Rivers ("CBTR"), which sought to change the way Twin Rivers is administered. The plaintiffs in the case challenged several aspects of the operation and rules of the association.
 
The trial court addressed three main issues before addressing the individual counts in the complaint: 1) whether Twin Rivers had "quasi-municipal" status; 2) whether the Planned Real Estate Development Full Disclosure Act ("PREDFDA") applied to Twin Rivers; and 3) whether CBTR had standing to sue on behalf of the association. The court determined that Twin Rivers did not have "quasi-municipal" status, that PREDFDA applied to Twin Rivers, and that CBTR did not have standing to sue on behalf of the association.
 
The trial court then addressed the plaintiffs' individual counts and ruled that:  
1.  The association's signage restriction was valid and enforceable;
2.  The fee and deposit for renting the community room were valid, but the association must provide clear standards regarding permission to use the community room;
3.  The association did not inappropriately censor or deny members their right to express opposing views in the community's newsletter;
4.  The business-judgment rule applied to the association's policy regarding document requests was valid;
5.  The association's rules regarding confidential information were vague and had been arbitrarily applied, were not allowed under PREDFDA, and were unacceptable under the business-judgment rule;
6.  The association's requirement that anyone requesting a list of eligible voters had to sign a confidentiality agreement was unenforceable because of the agreement's penalty clause;
7.  The association's ADR policy did not violate PREDFDA; and
8.  The voting scheme (which weighted individual units' votes according to their individual value) passed the business-judgment rule test, and tenants were not entitled to be association members and, therefore, could not vote.
 
Both the plaintiffs and the defendants appealed the case. The plaintiffs/appellants appealed counts one, two (in part), three, five, eight, and nine, while Twin Rivers appealed counts two (in part), six, and seven (in part). The court also considered whether, and in what situations, rights guaranteed under the New Jersey Constitution limit a community association's board in establishing and administering standards for the community. It also addressed the extent to which PREDFDA applied to Twin Rivers, because Twin Rivers was established before PREDFDA was enacted. Additionally, it examined various questions bearing on the application of the business-judgment rule and contractual standards. 
  
The plaintiffs contended that today's planned developments, which are technically private, have replaced municipal governments just as shopping centers, which are also technically private, have replaced downtown businesses. They argued that fundamental constitutional rights must be protected even though the environment in which those rights are exercised has changed. The association countered that constitutional standards apply to private-sector actors only when the public is invited onto their property. In this case, the appellants are not the invited public; they are members of the association.
 
In a discussion of constitutional rights, the court cited Marsh v. Alabama, 326 U.S. 501, 66 S. Ct. 276, 90 L. Ed. 265 (1946), noting that the argument in favor of the application of constitutional standards has its roots in Marsh. It also cited New Jersey case law establishing that the public's use of shopping centers has become so pervasive that a shopping center's invitation to the public to frequent its businesses includes an implied invitation to the public to conduct activities such as leafleting. The court concluded from the cited case law that the constitutional right to free speech in New Jersey is an affirmative right that is different from those same rights in most other states and could not be silenced because of a new way of doing business. The court then concluded that the appellants' rights to express themselves (even regarding electing directors to the association's board) took precedence over the association's private-property interests.
 
The court rejected Twin Rivers' argument that the New Jersey cases cited were based on private-property owners' implied or express invitations to the public. The court noted that, even if it recognized that factual distinction, it could find no basis for depriving the appellants of their rights under the state's constitution.
 
Finally, the court noted that it had a rationale other than case law in making its decision. The New Jersey legislature acknowledged a public interest in planned communities when it enacted PREDFDA, under which the legislature required that planned developments be regulated by the state. While the association invoked the business-judgment rule as the standard for reviewing a member's challenge to a community association's actions, the court disagreed. The court noted that, while the business-judgment rule is intended to prevent courts from second-guessing decisions made in good faith based on reasonable business knowledge, there are inherent limitations to the business-judgment rule. Additionally, when a court makes decisions about the meaning and application of constitutional standards, it often employs the rule of reasonableness.
 
The court then turned its attention to whether PREDFDA applied to Twin Rivers, and agreed with the trial court that it did. The court noted that the legislature would not have intended to protect the rights of residents in newer communities while ignoring the rights of residents of communities established prior to PREDFDA.
 
The last of the three main issues the court addressed was the CBTR's standing as a plaintiff. The court noted that all the issues raised in the case on CBTR's behalf could validly have been raised by one or more of the individual plaintiffs. The court left it to the trial court and the parties to determine whether it is necessary to make decisions on questions that CBTR raised.
 
Once the court decided that the trial court erred, it noted that it was fitting that it remand the case to give the trial court the opportunity to apply summary judgment standards in light of the appeals court's determination that the association was not insulated from scrutiny by the business-judgment rule and that the association's actions were subject to constitutional standards. The appeals court then examined the trial court's ruling on use of the community room. The court agreed with the trial court's determination that the board's resolution setting out requirements for use of, and the board's approval for use of, the community room could not survive examination under the business-judgment rule. Therefore, even though the trial court erred in basing its decision on the incorrect fact that the community room was open to the public, the misunderstanding qualified as a harmless error.
 
Regarding count six, the court affirmed the trial court's decision. The trial court ruled that the board's resolution regarding disclosing information that the board deemed confidential was not permitted under PREDFDA. Likewise, the appeals court agreed with the trial court regarding count seven. In that count, the appellants wanted access to the list of eligible voters without unreasonable conditions being attached to that access. The trial court invalidated the $1,000 liquidated-damages clause in the confidentiality agreement that members had to sign in order to obtain the list of voters. The appeals court stated that it did not rule on the merits of any of the appellants' claims that had any bearing on their constitutional rights, but rather simply noted that the trial court did not apply the correct standard.
 
Regarding count eight, the appellants' challenge to the board's resolution regarding alternative dispute resolution ("ADR"), the court agreed with the trial court's determination that the board's resolution requiring a petitioner requesting ADR to submit a $150 deposit did not unreasonably deny the petitioner access to ADR. The court also agreed with the trial court's determination on count 10 regarding the weighted voting provisions in the association's bylaws. The appellants' arguments regarding the voting issue would have measured the elections provisions by a standard previously applied only to public-sector elections. The court noted that without a basis in legislation it had no authority to effect such a change between members and their association.
 
In summary, the court affirmed the trial court's grant of summary judgment to the plaintiffs and its grant of summary judgment to the association on counts five, eight, and nine. It affirmed the trial court's general ruling that PREDFDA applied to Twin Rivers but vacated the trial court's order that dismissed the complaint as to CBTR for want of standing. The court also reversed the general ruling with respect to the members' fundamental constitutional rights. Although the trial court determined that the association was not subject to limitations imposed by the New Jersey Constitution and that the business-judgment rule applied, the appeals court disagreed. Finally, the court remanded the appellants' claims in counts one, two, and tree for the trial court to reconsider them under the proper standard.

©2006 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

Approval of Application for Zoning Variance Does Not Relieve Homeowners From Complying with Setback Requirements
Warwick Park Owners Association Inc. v. Sahutsky, No. 418-S, Del. Chancery Ct., Sept. 20, 2005
Architectural Control/Covenants Enforcement: In an unpublished opinion, a Delaware court ruled that homeowners must remove the foundation for a garage that was constructed in violation of the setback restrictions contained in the community's covenants -- despite local government approval.



On Sept. 13, 1995, George and Sandra Sahutsky purchased a home identified as Lot 26, Block C, Warwick Park, or 96 Comanche Circle, in Millsboro, Delaware. When they purchased the property, a setback was in effect that barred any structure or projection from being erected upon or extending within 30 feet of the road property line, 15 feet of the sidelines, or 20 feet of the rear line of any lot.  
     
The deed restrictions were later amended, and the Sahutskys constructed a garage addition to their home. The amended restrictions required that plans for any additions or alterations to existing dwellings be submitted in writing to the Warwick Park Owners Association ("association") for approval. The Sahutskys applied to the Sussex County Board of Adjustment ("board of adjustment") for a 12.5-foot sideline variance on Aug. 25, 2004. At the county's hearing for their application, both the association's board of directors and its president, individually, submitted letters opposing the application, but the variance was granted. 

On Sept. 3, 2003, the association sent a letter to the Sahutskys advising them that although they were granted a variance from the board of adjustment for their proposed construction, all additional construction must meet the setback requirements stated in the Warwick Park Covenants and Restrictions. Specifically, no dwelling, structure, or projection could extend within 30 feet of the road or property lines of any lot or 15 feet from the rear property line of any lot. A copy of the declaration's relevant restriction was attached to the letter, and the letter requested that the Sahutskys contact the association to confirm their compliance.  

On March 24, 2004, the Sahutskys responded to the association that the variance granted by the board of adjustment on Oct. 15, 2003, was final on Nov. 25, 2003, and was non-appealable. They informed the association that they intended to proceed with construction in accordance with the variance.
     
About one month later, while a member of the association's board was visiting the Sahutskys' neighbor, George Sahutsky walked over and told him that the trenches had been dug for the addition and the foundations would be poured on or before June 19, 2004. The association sued the Sahutskys for non-compliance with the association's CC&Rs. Work on the garage addition continued until the association's petition was filed, when it was agreed between the parties that construction would cease until the court reached a final determination. 
     
At trial, George Sahutsky stated that he had submitted hand-drawn sketches of his proposed structure to a member of the association's architectural review committee at an association board meeting. He said he was told to seek a variance from the board of adjustment, and he interpreted this to mean that if the board of adjustment granted the variance, the association would approve his application. James Denney, a witness appearing in support of the Sahutskys' argument, said that he saw George Sahutsky speaking with someone at the board meeting, and while he was not a party to the conversation, after the meeting Sahutsky seemed pleased and said he was going to apply for a variance and proceed with his plans to construct the garage addition. Witnesses for the association acknowledged that association board members informed Sahutsky he could get a variance from the board of adjustment, but stated that they had given him no assurance that a variance would exempt the proposed structure from the setback requirements in the declaration.
     
Although the court was sympathetic to the Sahutskys' position, it found that: 

1) Restrictive covenants govern all properties in Warwick Park and clearly state the setback requirements for garages and similar structures. The court noted that the dispute did not arise because of any ambiguity in the declaration or difficulty in its interpretation; the dispute arose when Sahutsky spoke with a member of the architectural review committee, who suggested he get a variance from the board of adjustment, presumably because he did not want to say "no" to a neighbor's request, and because he assumed the matter might end with the board of adjustment's decision. 
     
2) While the Sahutskys were waiting for the board of adjustment to rule on the application, they received a formal letter from the association's attorney that clearly rejected any tentative or conditional approval that might have been offered by a member of the architectural review committee on behalf of the committee. The court found that, as a technical matter, the committee member had no authority to give the Sahutskys technical or conditional approval to proceed with construction of the garage and, even assuming he had the authority to grant the approval, that approval was rescinded by the Sept. 3, 2003, letter from the association.  
     
3) The Sahutskys' position -- that the appeal period from the decision by the board of adjustment to grant the variance had expired, and that they now had a right to proceed with construction of the proposed garage -- was correct, but it depended on their ignoring explicit notice from the association that their proposal to build a garage within the setback area was contrary to applicable restrictive covenants. Therefore, the Sahutskys were on notice as of Sept. 3, 2003, that they did not have a right to proceed with the construction and were not entitled to rely on the committee member's informal authorization to proceed.  

The court found that the Sahutskys proceeded at their own risk when they constructed the garage's foundation after receiving explicit notice from the association. The court found no evidence that the architectural review committee member had authority to grant permission to Sahutsky to proceed without the association's permission. The committee member's apparent encouragement that Sahutsky seek a variance did not constitute estoppel, because Sahutsky had no right to rely on the member's statements and, even if he did rely on the statements, there was no detrimental reliance because before he took any steps to pour the foundation of the garage, he was informed by the association that he could not proceed.
     
Delaware case law recognizes that a zoning ordinance or variance cannot destroy, impair, abrogate, or enlarge the force and effect of an existing private restrictive covenant, and that restrictive covenants are a matter of contract and create rights in the nature of servitudes or easements. The court explained that zoning regulations, on the other hand, constitute governmental exercise of police power and must bear a substantial relation to public health, safety, and general welfare. The court considered it to be well-established that zoning ordinances or variances granted by a governmental authority cannot relieve a private-property ower from valid covenants if the ordinances or variances are less restrictive than the covenants. Consequently, the court found that the variance granted by the board of adjustment had no effect on the declaration's setback requirements. 
     
The court addressed waiver and estoppel, which were raised by the Sahutskys as affirmative defenses. It found that they failed to show that the association abandoned or waived its right to enforce the restrictive covenants that applied to the community. Further, it found the evidence offered by the Sahutskys in support of this argument to be anecdotal at best. The Sahutskys presented no evidence that could have led the court to conclude that the association had waived or abandoned its right to enforce its restrictive covenants. 

Finally, the court concluded that the declaration was valid and enforceable. The Sahutskys were not permitted to build their garage as it was configured because it would encroach beyond the required setback area. They were ordered to remove the offending portion of the foundation.

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Association Is Not Liable for Damages Sustained by Tripping Over Crack in Driveway
Cloutier v. Tannenwood Homeowner's Association, No. G035221, Cal. App. Ct., Oct. 27, 2005
Risks and Liabilities/Miscellaneous Association Problems and Operations: In an unpublished decision, a California appeals court upheld a trial court's opinion that failure to mend a crack in a condominium owner's driveway did not constitute negligence on the association's part but triggered the state's trivial-defect doctrine.



Alma Cloutier sued Tannenwood Homeowner's Association ("association") after she tripped on a crack in her driveway in October 2003. She argued that because the association owned, managed, and maintained the driveway leading to her townhouse, it had the duty to maintain the driveway in a safe condition. She alleged that the association breached this duty by allowing a one-inch lip to exist in the driveway where she walked, creating a hazard. Cloutier broke her left wrist and cut her eyebrow in the fall. Her wrist required surgery and pins to repair it and extensive physical therapy. More than a year after the surgery, she still had not regained full use of her wrist. She asserted that the personal injuries she sustained when she tripped resulted from the association's negligence in maintaining the driveway.  She sought $25,000 in damages. 
 
Cloutier first encountered the crack in her driveway eight or nine years earlier when she moved into her condominium. She was 77 at the time she fell. Four months earlier, she attended an association board meeting and asked that the crack be repaired. Several members of the board went to her home after the meeting to view the crack and discuss the situation with her, but the board took no action. In July 2003, Cloutier tripped over the crack and sprained her left ankle and scraped her right knee. She attended the July and August association board meetings and showed the board members her injuries and again requested that they repair the crack. Again, several board members reviewed the crack with her and determined that a neighbor's tree was causing the crack. The board had the tree cut down but did not repair the crack. 
 
At trial, the association moved for summary judgment on the basis that the crack did not pose a dangerous condition that would trigger a duty to repair because the height differential that Cloutier claimed she tripped over was less than one inch, and thus, as a matter of law, constituted a trivial defect. Although Cloutier presented photographs and a statement by the photographer showing that the crack was an inch and a half high, the trial court concluded that the crack constituted a trivial defect and ruled in favor of the association.
 
California law imposes no duty on landowners to repair trivial defects. Property owners are not liable for damages caused by minor, trivial, or insignificant defects in property, and people who maintain walkways, whether public or private, are not required to maintain them in perfect condition. The court explained that a walkway defect is trivial if it poses no substantial risk of injury to a pedestrian who exercises ordinary care. The court confirmed that the trivial-defect issue is a matter of law properly resolved by summary judgment. The court found that a landowner is not an insurer of the safety of its users. It stated that other court decisions had established that an elevation differential of up to an inch and a half is trivial as a matter of law and found that the crack in Cloutier's driveway fell within the parameters of this definition. In addition, the court considered other factors, including whether the driveway had rough or jagged edges or debris, whether grease or water concealed the defect, whether the area was well-lit, and other conditions that might obstruct a pedestrian's view. After examining the circumstances, the court could find no other factors that suggested that the crack in Cloutier's driveway posed a greater danger than its negligible depth.

Cloutier argued that the association should be assigned liability because she notified the board of the defect and because her prior fall put the board on notice. She suggested that her advanced age imposed a higher duty of care on the association. The court, however, found that the origin of the trivial-defect doctrine in municipal sidewalks cases reflected a duty owed to the public at large i.e., pedestrians who have a duty to use ordinary care for their safety and who reasonably exercise their faculties in order to protect themselves. The court could find nothing in Clothier's appeal to suggest that she did not have use of her faculties of self-protection at the time of the accident or that the association had a duty to protect elderly persons in particular. 

Finally, Clothier argued that the public policy underlying the trivial-defect doctrine operates so the burden of maintaining countless sidewalks running countless miles might be avoided. The court affirmed the trial court's ruling in favor of the association.

©2006 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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Association Cannot Appeal Common-Area Tax Valuation
Village Condominiums Owners Association v. Montgomery County Board of Revision, 106 Ohio St. 3d 223, 833 N.E.2d 1230 (2005)
Powers of the Association: The Ohio Supreme Court ruled that a condominium association does not have standing to contest a county tax auditor's assessment of the condominium's common areas.


 
As reported in the February 2005 issue of CALR, Village Condominiums is a 31-unit condominium located in Vandalia, Ohio. The Village Condominium Owners Association ("association") is a nonprofit corporation composed of the unit owners and charged with managing, maintaining, repairing, and replacing the common areas and facilities; paying utilities and personal services; purchasing; and maintaining necessary insurance.
 
The Declaration of Condominium Ownership provides that ownership of the common areas of the subdivision is vested with the 31 individual unit owners, with each owner owning an undivided interest based on the size of the owner's unit. In 2001, the Montgomery County, Ohio, tax auditor assessed the value of the common areas at $16,510. The association filed a complaint with the county board of revisions, which then reduced the common area's taxable value to $8,540. The association then appealed to the county's board of tax appeals. The tax appeals board ruled that the association did not have standing to file a complaint because the association did not hold legal title to the common areas. The association then appealed to the Ohio Supreme Court.
 
The association based its appeal on Ohio laws under which the association meets the definition of a "person" owning land in the county and the definition of a "party affected." Alternatively, the association cited another law that permits condominium associations to sue or be sued in actions relating to common areas.
 
In ruling in favor of the county board of revision, the Ohio Supreme Court cited an Ohio case in which the court applied a two-pronged test set out in the Ohio statutes to determine standing to file a complaint for a decrease in tax-liability valuation. Once a complainant satisfies the first prong of the test -- standing -- the court will make a determination about the second prong of the test -- whether the complainant is an "affected person." In that opinion, the court reasoned that the owner of the property is in the best position to contest the property-tax valuation. In order to have standing, a complainant must first demonstrate that he or she is a person owning taxable real property in the county.
 
The court also looked to an Ohio law that specifies "the common areas of a condominium are owned by the unit owners as tenants in common, and the ownership shall remain undivided." Another law specifies that "each unit of a condominium property and the undivided interest in the common areas are deemed separate parcels for purposes of taxation and assessment of real property."
 
The county auditor's property records do not indicate whether the developer or the individual unit owners own the common areas of Village Condominium; however, the court determined that the association does not own the common areas. The court also cited a statement made by the association's lawyer at a hearing on the case in which the attorney stated that the association "is a condominium and is not in the business of owning real estate. The owners own their undivided shares." Based on the county auditor's property report, the declarations, and the lawyer's statement, the court concluded that the association did not own property in Montgomery County, Ohio, and as such did not have standing to file a real property valuation complaint. Because the court determined that the association did not meet the threshold of the first prong of the two-part test, the court declined to consider the second part of the test.
 
The court then rejected the association's second argument that Ohio law permits associations to contest the common-area valuation. The court cited case law related to the rule of construction that specifies that a specific provision prevails over a general provision. The court noted that if a general provision conflicts with a specific provision they shall be construed, if possible, to give effect to both. If the conflict is irreconcilable, then the specific provision prevails as an exception to the general provision. Although the Ohio Condominium Act allows condominium associations to sue and be sued, another law permits only persons owning property to contest a real property assessment. The court found that one law did not negate the other.
 
In a dissenting opinion, Justice Lundberg Stratton stated that the statute on which the majority relied to reject the association's argument for standing does not limit a complainant to one who is a titled property owner. In fact, the statute permits parties acting as an owner's agent, including accountants and real-estate appraisers, to file a complaint contesting the value of a property.  That same statute allowed a board of education, a board of township trusts, and even a prosecuting attorney to contest the value of a property.
 
According to Justice Stratton, the common areas of a condominium are owned by the unit owners as tenants-in-common, and the association administers the common areas for the owners. Therefore, it is reasonable to believe that the association is the proper entity to represent the unit owner regarding the value of the property. As administrator of the common areas, the association's responsibilities would include the obligation to pay separately assessed real-estate taxes and expenses of the common areas. The majority's opinion requiring individual property owners to contest an assessment against their undivided interest in the common areas could lead to inconsistent results. In this case, there are only 31 members, but in other instances there could be hundreds of owners, resulting in a backlog of cases contesting small sums that ultimately could clog the appeals system and limit challenges to the valuation of common areas.
 
The property at issue in this case consists solely of common areas, which are held by unit owners as tenants-in-common, each with an undivided percentage interest but who are collectively represented by the association. Each of the 31 unit owners pays a property tax on their units and their undivided proportional interest in the common area. By following the majority's decision, and allowing an additional assessment to be levied against the common areas of the condominium with the addition of a cumbersome system of appeal, unit owners essentially levied an additional tax on their proportional interest of the condominium common area.
 

Justice Stratton also stated that the legislature did not intend to limit the standing of an association under R.C. 5715.19 to challenge the valuation of common areas it manages. Justice Stratton invited the legislature to amend R.C. 5715.19 accordingly.

Editor's Observation: The dissent got it right.

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Voting Rights Are Based on All Documents Related to Creating Association
Whitley v. Royal Trails Property Owners' Association Inc., 910 So.2d 381 (Fla. Dist. Ct. App. 2005)
Voting Rights: When provisions of a homeowner association's articles of incorporation, bylaws, and declaration conflict, the court should search for a reasonable, lawful, and effective resolution to such conflicts.



Royal Palm Beach Colony Inc. developed Royal Trails, a subdivision in Lake County, Florida, governed by the Royal Trails Property Owners' Association Inc. ("association"). The association is organized under the Articles of Incorporation of the Royal Trails Property Owners' Association, the association's bylaws, and the Declaration of Restrictions, which was recorded in the county's public records. Royal Trails consists of 862 units, 110 of which are "living units" and 752 of which are lots. 

The association's board of directors authorized a vote to revise the restrictive covenants to change the minimum requirements for the size of a single-family residence and to change the interest rate charged for late assessment payments. Although the measure was adopted by a vote of two-thirds of the owners of living units, it was not approved by a two-thirds vote of all unit owners. Hoyte and Martha Whitley, lot owners in Royal Trails, sued the association, asking the court to rule that the association improperly amended the declaration by allowing the vote of only the living unit owners and not a two-thirds majority of all property owners.
 
The trial court ruled in favor of the association. The amendment provision in the declaration allows for the amendment of the declaration where "an instrument signed by the Owners of two-thirds of the lots or living units has been recorded, agreeing to change or repeal said covenants and restrictions in whole or in part." The court found that the declaration's use of the disjunctive description of the two types of units provided license for either group of owners to amend the declaration with two-thirds vote.
 
The Whitleys appealed. Citing case law, the appeals court noted that when two or more documents are executed by the same parties at or near the same time, in the course of the same transaction, and concerning the same subject matter, they must be read and construed together. The court also noted that it was obligated to reach an interpretation consistent with reason, probability, and the practical aspect of the transaction. Where one document expressly refers to and sufficiently describes another document, it is to be interpreted as a part of the first document. Finally, the court stated that meaning is gathered from a general view of the whole writing with all parts compared, used, and construed with each reference to the others.
 
When reviewing all the pertinent documents together, the court found that the articles of incorporation provided for only two classes of voting members. Class "A" members consisted of all owners of lots, tracts, parcels, or living units, while the sole Class "B" member was the developer. The bylaws entitled every association member to vote on every properly submitted proposal at any association meeting. Also according to the bylaws, any vote to amend the declaration required a 51-percent quorum at a meeting and, according to the declaration, approval by two-thirds owners entitled to vote. Except for a provision that designated the developer as the sole Class "B" member, for voting purposes, there is no provision for treating any member differently from any other member. In order to give meaning to the guarantee expressed in the bylaws that every member is entitled to vote on every proposal before the association, the court ruled that it was inconsistent to interpret that two-thirds of either the lot owners or the living unit owners could unilaterally amend the declaration.
 
The appeals court found that the trial court's decision would bring about an impractical and unreasonable result and could further disrupt relations between lot owners and living unit owners. The court noted that interpreting the disjunctive term found in the declaration served to weaken the substance of the voting rights set forth in the articles and bylaws to produce an inequitable and impractical result. The appeals court reversed the trial court's judgment and remanded the case, instructing the trial court to grant summary judgment on the Whitleys' motion.

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Association Has Authority to Disconnect Electricity for Failure to Pay Assessments
Bauman v. October Hill Camplot Owners' Association, Case No. 03 CA 7, Ohio App. Ct., Nov. 21, 2005
Powers of the Association/Covenants Enforcement/Assessments:  An association acted within the scope of its governing documents by disconnecting a owner's utilities for nonpayment of assessments.



Jake Bauman owns a campsite in Holmes County, Ohio. In March 2003, the October Hill Camplot Owners' Association ("association") invoiced Bauman for $723 in dues and utilities due, payable May 1, 2003. The invoice contained a statement that if the amount was not paid by May 31, 2003, Bauman's electric meter would be disconnected and he would be charged a reconnection fee of $60. Bauman paid the invoice and reconnection fee on June 13, 2003. In August, Bauman sued the association, seeking reimbursement of the reconnection fee. The trial court ruled in Bauman's favor, and the association appealed.
 
The trial court considered Bauman's argument that Ohio law did not allow the association to disconnect his electric service in light of the landlord-tenant relationship as a statement of law, finding that such conduct by a landlord would be considered constructive eviction. The appeals court, however, determined that no landlord-tenant relationship existed between the parties; Bauman owned his camplot. All electric meters are owned by the association, and the association pays for all electricity.  The association permits camplot owners to use the electric service.
 
Article VI of the association's articles of incorporation provides that annual assessments are due and payable within 30 days after they are levied. Upon default, an assessment becomes a lien against the camplot, and the association is entitled to enforce payment of the lien in accordance with Ohio laws. Paragraph 29 of the association's Code of Regulations provides that "if any assessment, dues, electricity costs, late fees, legal fees, or other money owed to the association is not paid by the due date, the electric meter may be pulled, use of common facilities denied, and an assessment of $60 added to the account due immediately." The association included a copy of this regulation with the invoice it sent to Bauman.
 
On appeal, the association relied on San Antonio Villa Del Sol Homeowners Association v. Miller, 761 S.W. 2d 460 (Tex. App. 1988) (CALR April 1989), in which the court concluded that the association took the proper action in disconnecting a homeowner's utilities for nonpayment of maintenance fees assessments, noting that the owner who does not pay his share of assessments admits that the other owners are paying his way. 

Bauman argued that because he had a credit balance in his utilities account, his electricity should not have been disconnected. However, the court found that the invoice indicated that the association billed Bauman for dues and utilities. The fact that he had a credit balance for the utilities portion of the invoice did not negate his responsibility to pay the dues portion of the invoice on time. The court reversed the lower court's decision and charged Bauman with costs of the action.

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