November 2008
In This Issue:
Revoking Previous Approval of Construction Plans a Breach of Fiduciary Duty
Owner Cannot Evade Fine Regarding Architectural Control Violation
Association May Give Owners Exclusive Rights to Common Areas
Association's Silence on Construction Permit Review Construed as Acceptance
Lawsuit against Association for Breach of Fiduciary Duty Not SLAPP Suit
Court Gives Owner Second Chance by Modifying Injunction on Lot Construction
Association Has Right to Enforce Bylaws Regarding Pet Ownership
Successor Developer Does Not Have Blanket Right to Develop
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Revoking Previous Approval of Construction Plans a Breach of Fiduciary Duty

Brutocao v. The Hunt Club Community Association, No. G037266, Cal. App. Ct., Feb. 29, 2008

Architectural Control/Powers of the Association: In an unpublished opinion, a California appeals court ruled that an association's architectural plan review process was not an "offer and counteroffer" process. Rather, it was regulated entirely by the declaration, and any decisions made outside of the powers enumerated in the declaration were invalid, however reasonable the response.

The Hunt Club is a subdivision located in San Juan Capistrano, Calif. All owners of homes in the community are members of the Hunt Club Community Association ("association") and are subject to the community's CC&Rs and its architectural and landscaping standards. Several years ago, the association conducted a comprehensive program to repair or repave the community's streets. The association hired a professional pavement engineering company to consult and explain how the association could prepare the streets for the next 15 years of road wear. The company's project engineer wrote a memo advising that the improvement of Ascot Lane, a street in The Hunt Club, should not proceed until subsurface water under the road was drained. The engineer advised the association to construct a French drain and to delay repairs on Ascot Lane for a minimum of one year to allow the pavement to drain freely. The association never acted on that advice.

Roberto and Margaret Brutocao moved into a home on Ascot Lane in The Hunt Club in February 2000. After a few months, they noticed that water was ponding in their front yard and had saturated the street in front of their house. Because the problem was persistent, the Brutocaos and their neighbor notified the association. In 2001, Roberto Brutocao followed up that complaint with a letter to Jim Shubsda, the association's property manager.

In the meantime the Brutocaos decided to remodel their home, expanding it and modifying the landscaping and drainage. They submitted plans to the association's architectural committee in June 2001. After a series of corrections and setbacks, the committee approved the plans with a few additional conditions. Those conditions required soil sample tests, landscape plan submissions, a maintenance agreement with the association and a $2,000 deposit.

After meeting with a contractor, the Brutocaos submitted a redrawn plan to the committee in November 2003. When the association informed the Brutocaos that the architectural review committee had denied the revised plans, the Brutocaos told the association they would proceed with the previously approved plans. After much correspondence between the Brutocaos and the association, the association sent a "cease and desist" letter to the Brutocaos on February 5, 2004. The Brutocaos and the association agreed to refrain from suing the other. However, soon after the agreement was made, the association's lawyer sent a letter to the Brutocaos' lawyer, stating that the Brutocaos failed to meet the initial conditional approval of the plans. Roberto Brutocao believed that the association was taking the position that the approval of his plan had expired.

The Brutocaos sued the association in September 2004, seeking declaratory relief and damages based on the association's refusal to allow them to build according to the originally-approved plans. After mediation and a voluntary settlement conference, the Brutocaos submitted revised plans, but those plans were subsequently rejected. Before the case went to trial, the association repaved Ascot Lane. While no French drain was installed, a new cement curb and gutter were placed along half of the Brutocao property, which only worsened the drainage problem.

In a bench trial in March 2006, the Brutocaos amended their complaint to include the drainage problem, and the trial court ruled in favor of the Brutocaos. The court found that the association's February 2004 cease and desist letter was an unauthorized repudiation of the previously approved plans. The court also determined that the association breached its fiduciary duties to the Brutocaos by refusing to install a French drain when a reasonable association would have installed the drain because of the history of the problems and the recommendation of the engineering expert. A further breach of fiduciary duties occurred when the association failed to build the cement curb to extend across the entire length of the Brutocaos' property.

On appeal, the court sustained the trial court's decision. It also rejected the association's theory that the construction approval was an "offer" and that the revisions submitted by the Brutocaos were a "counteroffer." The court ruled that it was the community's CC&Rs that constituted a contract between the Brutocaos and the association, not a back-and-forth plan approval process. The court noted that declarations are the sole source of authority for community associations; and, where an association exceeds its scope of authority, any rule or resulting decision is invalid. The only remedy for circumstances that arise outside of a declaration is to amend the declaration.

In this case, the declaration provided for the architectural committee to approve or disapprove a plan within 30 days of submission. If the committee failed to take action, it would be assumed that approval was granted. The declaration contained no language that an approval would be invalid if a homeowner proposed modifications so long as the homeowner agreed to build according to the approved plans if the modifications are rejected. Because there was no dispute that the committee had approved the original plans and because the Brutocaos told the committee their intentions to proceed with the original plans if their revised ones were rejected, there was no evidence to support the association's claim that the Brutocaos had withdrawn the approved plans. The court determined that the Brutocaos had the right to begin construction and that the association breached the declaration when it sent the cease and desist letter.

The appeals court ruled that the association further breached its fiduciary duty when it failed to install the French drain and extend the curb and gutter. In its analysis, the court cited Cohen v. Kite Hill Community Association, 142 Cal. App. 3d 642, 191 Cal. Rptr. 209 (1983) (CALR June 1983). In Cohen, the court recognized that homeowners associations play an increasingly important role in public service functions such as maintenance and repair of the public areas and utilities, street and common area lighting, etc. In this case, the association blatantly testified that it would install the curb and gutter to extend to the full length of the property if the Brutocaos dropped their lawsuit. This constituted substantial evidence that the association's actions were arbitrary and were not made in good faith.

Citing Nahrstedt v. Lakeside Village Condominium Association, 8 Cal. 4th 361 (1994) (CALR October 1994), the association argued that its decision to install a cement curb and gutter across only a portion of the Brutocaos lot was protected by the business judgment rule. The appeals court disagreed and determined that the trial court concluded that the association's board had not acted in good faith and that evidence substantiated that fact. The court went on to state that the association only had the powers enumerated within the declaration. The appeals court affirmed the trial court's decision and ordered the association to pay the Brutocaos costs on appeal.

©2008 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

Owner Cannot Evade Fine Regarding Architectural Control Violation

El Dorado Heights Homeowners' Association v. DeWitt, 344 Mont. 77 (2008)

Architectural Control: Fees imposed against a homeowner as punishment for her meritless attempts to avoid compliance with an agreement between herself and the association were invalid as criminal contempt but were acceptable as an exercise of the court's equitable powers.

In May 2006, the El Dorado Heights Homeowners' Association ("association") sued Kevin DeWitt, requesting that the court grant temporary and permanent injunctive relief, including a temporary restraining order, to prohibit him from continuing construction on a lot in the subdivision. The association claimed that the construction plans violated the restrictive covenants and the architectural guidelines for the community. The plans called for the use of prohibited materials and colors on proposed buildings and contained improper setbacks from the road. The court granted the temporary restraining order and scheduled a hearing for the end of May.

DeWitt denied that the materials and plans violated the covenants, denied ownership of the lot, and claimed that Diane Boles owned the lot. At the hearing, the association's representatives and Boles appeared together, stating that they had reached an agreement regarding the alleged violations and that because they had reached an agreement, which they put in writing and called a stipulation, there was no need formally to amend the complaint to reflect Boles as the proper defendant. The stipulation, in which Boles agreed to remove the red metal roof on her barn by April 15, 2007 and under which the association allowed her to continue construction under a new building plan, was filed in June 2006, and the temporary restraining order was dissolved.

In August 2006, Boles substituted counsel and filed a motion seeking a stay of the stipulation. She then filed a brief and affidavits of several professionals, along with other homeowners that supported her contention that the roof did not violate the covenants. The association responded with a motion seeking to hold Boles in civil contempt for her violation of the court order incorporating the stipulation. The court rejected all of Boles' motions and ruled in favor of the association on its motion for civil contempt. The court awarded attorney's fees to the association pursuant to its equitable powers and as a sanction against Boles. The court also instituted a fine against Boles of $300 for every day that she failed to remove the roof. Boles appealed the case.

The appeals court agreed with the trial court that the trial court had personal jurisdiction over Boles. It also agreed that no credible evidence existed that would support Boles' claim that the association coerced her into signing the stipulation or interfered with her attempts to bring amendments to the covenants to a vote, that the covenants prohibited metal roofs, and that the stipulation was a valid agreement made with mutual consideration. The court concluded that the trial court did not err in granting the association's motions, holding Boles in contempt, and requiring that she remove the roof. However, the court vacated the fine because of a statute that capped any sanction imposed for contempt.

The court also concluded that the contempt order issued by the trial court was not a civil contempt but a criminal contempt because of the attorney's fees imposed as a punishment against Boles. Such fees constituted criminal penalties, which could not be imposed unless Boles was afforded proper protections and due process. Since Boles was not provided with such protections, the appeals court used the statement by the district court that the award of fees had been entered pursuant to the district court's equitable powers as the basis for such fees.

©2008 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Association May Give Owners Exclusive Rights to Common Areas

Harvey v. The Landing Homeowners Association, 162 Ca. App. 4th 809, 76 Cal. Rptr. 3d 41 (2008)

Powers of the Association: An association is permitted to grant exclusive rights to common areas to individual owners if the condominium declaration grants the authority and discretion to do so.

The Landing is a four-story, 92-unit condominium complex in Coronado, Calif. On the fourth floor of The Landing, each of the 23 units has attic space on top of the units, which is designated as common area. The attic space can only be accessed by the fourth floor units. For many years, several fourth floor unit owners used the vacant attic space, but after a complaint by another unit owner, the board of The Landing Homeowners Association ("association") conducted an inspection of all the attic spaces.

Of the 23 fourth floor units, 18 owners were using the attic space, ranging from 50-288 square feet of the common area. Ten owners were using more than 120 square feet of the space, and one unit owner had converted a portion of the common space into habitable living space. After the inspections were done, the architectural review committee's memorandum to the board concluded that the use of the attic space was "nominal" and suggested signing licensing agreements with fourth floor unit owners to secure insurance and liability for the use of the area.

However, the association's lawyers told the association that it may not have the authority to grant the encroaching owners the right to continue using the attic common areas. Based upon this advice, the association issued violation notices to the encroaching homeowners. Due to the complaints of a disgruntled homeowner, the City of Coronado became involved, and its inspectors advised the association that the attic space could only be used for storage and could not be used for living space. Several of the homeowners retained legal counsel and claimed that they had an irrevocable right to use the attic space that could not be disturbed by the association.  

In 2003, the association settled the dispute during a board meeting by signing an agreement with fourth floor unit owners to limit the use of the attic space to 120 square feet, the amount theoretically allocated to each unit owner. The association also took steps to ensure that the association's insurance coverage was not affected. The city conducted periodic inspection and found that, outside of a few minor violations, the fourth floor owners complied with the agreement.

Three years later, the association passed a resolution that transferred to the fourth floor owners the exclusive right to use the common area attic space above their units. Shortly afterward, Miles Harvey, a board member and former president of the association, sued the association for trespass, breach of fiduciary duty and injunctive relief. The trial court ruled in favor of the association, determining that The Landing's declaration gave the board the authority and the discretion to allow an owner exclusive control over common area. The court concluded that the association made the decision after a reasonable investigation and acted in good faith and in the best interest of the community association. Generally courts defer to the board of a community association for expertise on use of common areas. Harvey appealed.

The appeals court affirmed the trial court's decision, finding that the declaration expressly granted the association authority and discretion to grant an owner exclusive use of a common area that is nominal in area and adjacent to the owner's unit. There was no dispute that the attic space was available only to fourth floor units and that its use by fourth floor owners was not an unreasonable interference with the other owners' enjoyment of the community.

Harvey contended that the declaration banned the use of common area for private storage. However, the declaration did not have a blanket prohibition. The declaration gave the association discretionary power to allow owners the exclusive use of the common areas and allowed the board to modify the use of common areas, including designating them as storage areas. The appeals court cited the rule of judicial deference in deferring to the association's authority and expertise regarding its sole rights to maintain, control and manage the common areas.

The court also found no grounds for the breach of fiduciary duty and conflict of interest claims. It is true that in order to pass the resolutions permitting the exclusive control of the attic to the fourth floor owners, the association required the votes of fourth floor unit owners. Citing the Corporations Code of California ("Act"), the court found that in situations where board approval was based on a vote by an interested director, the burden is upon the person challenging the transaction to produce evidence that the interested director has material financial interest.

In this case, Harvey did not produce any evidence that the fourth floor owners approving the resolution had obtained a material financial interest when they voted to allow storage in the attic. It was undisputed that the resolutions were adopted with unanimous or near unanimous majorities. According to the Act, where there is a disinterested majority and full disclosure of the proceedings the contract or transaction is considered valid.

Without any evidence to show that the fourth floor unit owners were voting for their own pecuniary gain, the court ruled in favor of the association in affirming the decision.

©2008 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Association's Silence on Construction Permit Review Construed as Acceptance

Huntington Park Condominium Association, Inc. v. Van Wayman, No. 13-05-00464-CV, Tex. App. Ct., Feb. 28, 2008

Architectural Control: An association will lose its ability to limit construction projects in a community if it chooses not to assert its claims for years and the defendant relied upon their silence.

Kenneth Van Wayman owned a unit at Huntington Park Condominium. Before he bought the unit, he sought permission from Huntington Park Condominium Association, Inc. ("association") to enclose the patio area adjacent to the unit. The association's board did not reply to his submitted plans. Three years later Van Wayman enclosed the patio without further approval, and the association subsequently sued Van Wayman, asking the court to order him to remove the fence.

The trial court ruled in favor of Van Wayman, concluding the following facts: (1) the association did not respond to Van Wayman's request regarding enclosing the patio; (2) Van Wayman would not have purchased the condo if he had not been allowed to make the alterations; (3) Van Wayman completed the enclosure of the small patio on July 4, 2003; (4) in early 2004, the association told Van Wayman that the enclosure was acceptable and that it could be used as a standard for other owners; and (5) the association's lawsuit against Van Wayman was filed on Jan. 10, 2005. In his conclusions of law, the trial court judge determined that (1) Van Wayman's enclosing the patio did not cause imminent harm or irreparable injury; (2) the association ratified the enclosure; and (3) the association's claims were barred by laches.

The association appealed, and the appeals court upheld the trial court's decision. Specifically, Van Wayman prevailed both because he relied on the association's notice that the patio enclosure was acceptable and because the association did not respond to his initial request for approval. The association led Van Wayman to believe that he was permitted to enclose his patio, a factor that was fundamental to his purchase of the unit. The association's silence only furthered the notion that the enclosure was neither illegal nor disruptive to the community.

The court also addressed the association's claim that the trial court should not have applied the doctrine of laches. The doctrine of laches is a legal theory that equity (specifically in this case, the association's request to the court to remove Wayman's patio enclosure) is given only to the vigilant. Neglecting to assert a claim, together with a lapse of time, prejudiced the association. The association was guilty of inaction because it was given notice of Wayman's plans in 2000 prior to his purchase of his unit. Wayman completed the enclosure in 2003, and the association did not file the suit until 2005. Citing Foxwood Homeowners Association v. Ricles, 673 S.W.2d 376 (1984), the court noted that the association was required to perform due diligence. Yet the association chose to ignore the provision from the community's declaration that the board was required to respond to proposed plans within 30 days.

The court affirmed the trial court's decision.

©2008 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Lawsuit against Association for Breach of Fiduciary Duty Not SLAPP Suit

Lim v. Malibu Bay Owners Association, No. B199141, Cal. App. Ct., June 2, 2008

Powers of the Association: In an unpublished opinion, a California appeals court denied an association's motion to strike an owner's lawsuit alleging breach of fiduciary duty under an anti-SLAPP statute because no public issue was involved.

Renee Lim filed a complaint against the Malibu Bay Owners Association ("association") for breach of fiduciary duty—seeking accounting and declaratory relief—alleging that the association had failed to: maintain its books and records according to generally accepted accounting principles; exercise oversight of the property and property management company; exercise due and proper care for the funds paid by owners; exercise due and proper care for the physical condition of the property; and properly manage its financial affairs. 

Lim also alleged that the association had attempted to silence her protests against its conduct and activities by threatening her with economic penalties. In response, the association filed a motion to strike the complaint as a SLAPP (strategic lawsuit against public participation) suit, asserting that the suit was aimed at depriving the association of its right to free speech. The trial court denied the association's motion on the ground that Lim's lawsuit did not involve protected activity and awarded her attorneys' fees in the amount of $2,000.

When the association appealed, the appeals court affirmed the trial court's decision. The court noted that the anti-SLAPP statute provides that "a cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." The court noted that an anti-SLAPP motion required a two-step process, deciding first whether the defendant had shown that the challenged cause of action arose from protected activity relating to a public issue, and then determining whether the plaintiff would in all probability prevail on the claim.

The court found that the association failed to demonstrate that Lim's complaint arose from protected speech or petitioning activity, and that there was no public issue involved in the complaint. The court held that the public interest component is met when the statement or activity precipitating the claim involved a topic of widespread interest and the statement in some manner contributes to the public debate. 

Whereas in other California cases a specific public interest had been demonstrated in cases where a group of 3,000 individuals would be affected and where a homeowners association had been involved in an ongoing dispute about enforcement of its architectural guidelines, in this case there was no showing of protected speech relating to a public issue. Rather, the association admitted that there had only been communication between the association and Lim or her counsel. Because the court found no connection to a public issue, and therefore the complaint could not have arisen from protected activity, the court affirmed the trial court's decision denying the motion to strike and awarding attorneys' fees to Lim.

©2008 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Court Gives Owner Second Chance by Modifying Injunction on Lot Construction

Nellie Gail Ranch Owners Association, v. Colombo, No. G038603, Cal. App. Ct., March 24, 2008

Architectural Control: In an unreported decision, a California appeals court ruled that an association has the right to an injunction against construction and the right to clean up all construction work because residents failed to comply with the community's governing documents, but the lot owners have additional time to construct buildings.

Ralph and Ida Colombo purchased a vacant lot in Nellie Gail Ranch in Orange County, Calif. In the spring of 2001 they submitted plans to build three structures on the property: a retaining wall, a barn and a single family home. The Nellie Gail Ranch Owners Association ("association") approved the plans in July 2001. The community's CC&Rs required that a lot must include a single family home and also required construction to be completed within one year of the plans being approved.

The Colombos received two extensions, in April 2002 and September 2003. In return, the association asked when it could expect construction to be finished because there was apparently "no end in sight" and the construction was becoming "unattractive to the eye." Another letter from the association in October 2003 offered one more extension in exchange for the Colombos erecting dark green construction screening around the perimeter of their lot. In October 2004, the association's lawyer sent the Colombos a notice informing them that they had violated the one-year deadline for completion of construction. After six months of mediation, the association finally sued the Colombos in July 2005. The Colombos did not file an answer until November.

At trial in early December, the Colombos submitted evidence that they had secured an $800,000 construction loan, but even with such evidence the trial court granted the association an injunction, which prohibited further construction by the Colombos and prohibited them from interfering with any demolition or clean up work of the existing construction site. The order also stayed the injunction for 30 days to allow the Colombos to submit plans for a single family residence. If, after a good faith review, the plans were approved, the stay would extend for a year from Feb. 5, 2006 to permit the Colombos the time to finish the construction. The Colombos appealed, and the appeals court stayed the injunction while it considered the appeal.

On appeal, the Colombos argued that the association's September 2003 request to erect screening was a condition and that they reasonably relied upon the request as an extension to the deadline. The appeals court rejected that argument. While the association admitted that it did not intend to halt the construction at that point if the Colombos complied, it never expressed such views. The court also noted that relying upon an implied extension does not reasonably grant an indefinite extension. Considering the declaration, it is only reasonable to assume that, if an extension was granted, it would only last for one more year. By the time of the trial, the Colombos had already been granted three additional years to complete the construction.

The appeals court stated that the most damaging evidence against the Colombos was the community's declaration. The Colombos submitted evidence at the trial level that they had made progress in the retaining wall and the barn, but that evidence was rejected. It was undisputed that the Colombos had apparently abandoned any attempt to complete a house on the property. The declaration stated that construction on a residential house must be complete before other construction on the lot. Thus, any proof of work on the retaining wall and barn was irrelevant because the house was a mandatory element of approval by the association. Therefore, completion of the latter two projects may have delighted the association but would still violate the declaration.

The appeals court affirmed the trial court's injunction with some modifications. The court gave the Colombos additional time to submit construction plans for a house. The court also told the association to perform a good faith review of those plans. If the Colombos resubmitted the plans the association originally approved, the court told the association that it had to approve those plans. If the Colombos submitted new plans, the court directed the association to review those plans against the standards that existed in 2001. Once the association approved the plans, the Colombos had 120 days to begin construction. Once construction commenced, the court imposed a time frame for completion—the time it took the association to approve the plans plus the time it took for the Colombos to get municipal approval plus one year. If construction was not completed in that time, the association then had the right to demolish existing structures. The court ruled that each party would pay its own costs.

©2008 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Association Has Right to Enforce Bylaws Regarding Pet Ownership

Ryefield II Association, Inc. v. Drummond, No. TTDCV0840084095, Conn. Superior Ct., Feb. 1, 2008

Powers of the Association: In an unreported decision, a Connecticut superior court ruled that an association has the right to protect the interests of its members and their right to freely enjoy the common space by limiting and later requiring the removal of a dog from the community.

Diana Drummond owned and resided in the Ryefield II, a condominium complex in Vernon, Conn., with her two dogs, one of which was named Lobo. On Aug. 30, 2007, Janice Jarry, another resident at Ryefield was attacked by Lobo when she approached Drummond. Jarry required medical treatment at a local hospital. On Sept. 12, 2007, Jarry was watering a flower bed and Drummond was exercising her dogs. Lobo tried to charge and growled aggressively at Jarry, causing Drummond to employ significant force to restrain Lobo. Following the two incidents, Jarry filed a complaint with Vernon's animal control department, which resulted in an order by the department that Lobo be quarantined at Drummond's residence for two weeks.

Under the bylaws of Ryefield II Association, Inc. ("association"), only dogs "of gentle disposition" may be kept at the condominium complex and any "pet causing or creating a nuisance or unreasonable disturbance or noise shall be permanently removed…." On Sept. 20, 2007, the association notified Drummond of the complaints regarding Lobo's behavior with respect to Jarry and other residents. The notice advised Drummond to remove Lobo from the complex once the quarantine expired. Drummond failed to comply with the initial request, and the association mailed a further warning to her, threatening legal action and the imposition of fines. The second letter also advised Drummond of her right to a hearing by the board of directors.

On Nov. 13, 2007, the board conducted a hearing, at which Drummond presented her version of the events. While she admitted that Lobo had bitten Jarry, she argued that Lobo was provoked to attack in both instances and offered a report from a veterinarian that Lobo was a "sweet and playful" dog. After deliberation, the board concluded that Lobo was too aggressive and too difficult to control to be kept at the community. The board upheld the removal order, and the association sent Drummond a letter to that effect on Nov. 14, 2007.

The association sued Drummond when she refused to comply with its decision. The trial court ruled in favor of the association and determined that the association's rules were equivalent to restrictive covenants, which are enforceable by injunction without the need to prove harm. The association acted within its powers enumerated under its regulations and statutory authority when it ordered Lobo's exile.

While the court in this case ruled in favor of the association (granting an injunction is an equitable remedy and injunctive enforcements for violations of this nature) the court was obligated to weigh the equities in determining whether and how to enforce the regulation. As part of the balancing test, courts view the exercise of a condominium association's power broadly. Citing Weldy v. Northbrook Condominium Association, Inc., 279 Conn. 728, 904 A.2d 188 (2006), the court pointed out that each unit owner in a condominium gives up a certain degree of freedom of choice that he or she might enjoy in separate, privately owned property. The evidence showed that Lobo did not have a gentle disposition and that he disturbed and adversely affected the peaceful use and enjoyment of the condominium complex by other unit owners. Drummond remained blind to Lobo's proclivities and obstinately defied the association's removal order.

While recognizing a time-honored and treasured master-dog relationship, the court had to balance the rights to the common areas between Drummond and other Ryefield II residents. The court enjoined Drummond from keeping Lobo at the condominium and ordered her to pay a fine of $50 per day for every day Lobo remained at the condominium after April 1, 2008.

©2008 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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Successor Developer Does Not Have Blanket Right to Develop

Southwick at Milford Condominium Association v. 523 Wheelers Farms Road, LLC, No. CV0650000784, Conn. Superior Ct., March 3, 2008

Developmental Rights: In an unreported decision, a Connecticut superior court determined that a successor developer's special development rights lapsed because the developer had no obligation to existing unit owners.

523 Wheelers Farms Road, LLC ("Wheelers") acquired all development rights and special declarant rights for the Southwick at Milford Condominiums from New Haven Savings Bank after the bank initiated a foreclosure action on the original developer of the condominium project. Wheelers received approval from the Milford, Conn., zoning commission to construct additional condominiums on the land. Southwick at Milford Condominium Association ("association") sued Wheelers, seeking temporary and permanent injunctions to prevent the successor declarant from proceeding with the construction and asked the court for a declaratory judgment to settle the rights the parties had in the land.

Wheelers claimed it received a quitclaim deed from New Haven Savings Bank for all the rights in the condominium, including all development rights and special declarant rights. According to that deed, Wheelers had rights to complete improvements on the land, to exercise development rights on the land, and to use easements through the land. Those rights could only be exercised so long as fewer than 20 years had elapsed since the date the declaration was recorded, or the developer was obligated under any warranty or obligations, owned any of the condo units or had a security interest on any units.

Wheelers claimed that it had responsibilities to the current unit owners based on a provision of Connecticut's Common Interest Ownership Act ("Act") that requires declarants to finish any improvements shown on plats or plans unless the improvements shown are labeled "Need Not Be Built." Wheelers contended that the site plan included in the original condominium declaration depicted a gazebo and clubhouse that were labeled neither "need not be built" nor "must be built" and argued that those improvements were the type of obligations the Act contemplated.

In defining the issue it needed to address, the court noted that 20 years had not lapsed since the declaration was recorded and that Wheelers was not responsible for any warranties on existing units. Therefore, the court determined that the question to be decided was whether Wheelers had an obligation under a provision in the declaration that preserved special declarant rights to it. Section 7.9 of the declaration provides:

"…any special declarant rights may be exercised by the declarant so long as the declarant is obligated under any warranty or obligation, owns any units or any security interest on any units, or for twenty (20) years after recording the declaration, whichever is sooner. Earlier termination of certain rights may occur by statute."

Citing Cantonbury Heights v. Local Land Development, LLC, 273 Conn. 735, 873 A2d. 898 (2005), the court noted that the Connecticut Supreme Court construed the obligations of a nearly identical provision as being limited to those owed to the unit owners themselves. In the current case, the only obligations offered by Wheelers are buildings that are not labeled at all and are contained within the "Phase II" portion of the site plan. Relying again on Cantonbury Heights, the court ruled that any ambiguity in a declaration must be construed against the developer who authored the declaration.

In Cantonbury Heights, the Supreme Court ruled that the purpose of the obligation limitation in the declaration is to prevent a declarant from extending a development project over a long time period, which would cause a large difference in age between existing and new units and, in turn, adversely affect maintenance fees and property values. For example, it would allow a developer to extend its development rights to the maximum duration simply by leaving a minor improvement in a separate development phase unlabeled on the site plan. In this case, Wheelers’ argument that the obligations for the gazebo and the clubhouse gave them the right to develop would lead to an unreasonable result if read with the rest of the Act.

The court determined that the gazebo and clubhouse do not constitute unequivocal "obligations" owed to the current unit owners because Wheelers could have withdrawn them along with the entirety of Phase II at any time.  The special rights given to the Wheelers under Section 7.9 of the Declaration had lapsed; therefore Wheelers did not have a right to develop.

©2008 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited.

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