December 2010
In This Issue:
Decks Not Part of Condominium Common Area
No Dismissal of Sheriff's Sale Used to Collect Unpaid Lien
Fines to Enforce Restrictions OK if in Governing Docs
Association Can't Charge Easement Holders Beach Fees
Failure to Ask for Jury Trial Found as Waiver of Right
Association Negligent for Failing to Repair Defect
Association Not Entitled to Easement on Withdrawn Land
Steps Constructed on Common Area Violate Covenants
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This issue of Law Reporter is sponsored by CAI Press

Decks Not Part of Condominium Common Area

Burns v. Moorland Farm Condominium Association, No. NC-2007-0610, R.I. Super. Ct., Aug. 27, 2010

Developmental Rights: A Rhode Island court ruled that decks appurtenant to condominium units did not constitute common areas because they were for the private and exclusive benefit and use of the units to which they were connected.

Moorland Farm Condominium Association is located in Newport, R.I. It was established by a declaration recorded in September 1980. Phase I consists of units contained in three buildings. Each unit has at least one or two rear decks and two pocket decks. Access to all but a few of the decks is through the units themselves. Use and enjoyment of the decks is restricted to the individual unit owners and their invited guests.

From 2006 through 2009, the association levied a total of $985,650 in special assessments to replace the decks and entry courts in Phase I units. Phase II and III unit owners received no benefit from the replacement of the decks and entry courts in the Phase I units.

The declaration lists "Outside Deck" as a feature units are allowed to have in the "Code of Features" and specifically delineates the "common areas and facilities" of the development. Although the declaration includes spaces among the common area as "the entrances, entry court areas, and exits of the building, and the outside steps, porches, yards, lawns, driveways, parking area, outbuildings, plans and walkways and the improvements thereon," decks of individual units are not identified or otherwise designated as common areas, and no other references to "porch" or "porches" appears in the declaration. Likewise, the terms "porch" or "porches" do not appear in the Rhode Island Condominium Act ("Act"). 

The common areas and facilities at Moorland Farm are intended for the operation, support and maintenance of the project and for the comfort and convenience of all unit owners. However, owners of Phase II and III units are not permitted to use the decks and entry areas of Phase I units without the permission of the Phase I unit owners. 

The declaration defines "limited common areas" as "facilities in which the Unit or Units hereinafter specified shall have appurtenant thereto an exclusive right and easement of use." It specifically designates the "entry court area" as a limited common area, "for the private, exclusive use of and appurtenant to such Unit." The declaration provides that limited common areas are to be maintained by the unit owners benefited, at their own expense. Decks are not identified or otherwise referred to as limited common areas. 

Each unit owner has a percentage of undivided interest in the common areas, limited common areas, and facilities, based on the square footage of each unit. The area measurement consists of the interior living space plus a percentage of deck space, garage space and attic space with at least 6-foot clearance.

Based on the foregoing findings of fact, the court concluded that the decks were parts of individual condominium units, being neither common areas nor limited common areas. Consequently, the four assessments levied against unit owners to repair the decks in Phase I were illegal. The court ruled that the association should refund all the special assessments to the unit owners and re-assess the cost of the deck replacements to the owners of the Phase I units whose decks and entryways were replaced or repaired. 

©2010 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

No Dismissal of Sheriff's Sale Used to Collect Unpaid Lien

The Classic Courts Condominium Association v. Kozinski, No. 4047, Pa. Ct. Com. Pl., July 27, 2010

Association Operations: A Pennsylvania court denied a unit owner's motion to set aside a sheriff's sale in a foreclosure action to collect unpaid condominium fees.

The Classic Court Condominium Association is located in Philadelphia County, Pa. The association sued Mark Kozinski to enforce a lien for unpaid condominium fees. The court entered judgment in favor of the association and Kozinski's unit was listed for sheriff's sale in November 2008.

Kozinski filed bankruptcy in February 2009 and entered into a settlement stipulation, agreeing to execute a listing agreement so his property could be sold at fair market value through a private sale. The settlement stipulation provided that if the property was not sold before June 15, 2009, the association had the right to list the property for sheriff's sale. 

Kozinski failed to provide the association with a listing agreement, and the association relisted the property for sheriff's sale. The unit was sold for $25,000 to the association's attorney in July 2009.

Kozinski filed a motion to set aside the sheriff's sale in August 2009, alleging that the association agreed not to list the property prior to the sale scheduled for September. His motion was denied, and he appealed. 

With respect to his motion to set aside the sheriff's sale, Kozinski argued that the association failed to properly notify him of his breach of the settlement stipulation and the resulting sheriff's sale. He also argued that the sale price for the unit was less than the fair market value of the property.

The court acknowledged that upon petition of any party in interest, the court was authorized to set aside the sale and order a resale or enter any other order that may be just and proper, upon a showing of proper cause. However, Kozinski failed to provide any evidence to support his allegations that the sheriff's sale should be set aside. 

Although he claimed he did not know he had breached the settlement stipulation, evidence showed that after the association did not receive proof of a listing agreement, Kozinski was served with a certification of default of stipulation. The certification was followed by further notice on June 15, 2009, that the unit was not sold by the date required in the settlement stipulation. Finally, on June 16, 2009, Kozinski was notified that the sheriff's sale was scheduled for July 7, 2009.  

To Kozinski's claim that the sheriff's sale should be set aside because the sale price was less than fair market value of the property, the court noted that challenge of a sale based entirely upon inadequacy of the price, is not a sufficient basis for setting aside a sheriff's sale.

Accordingly, the prior order was affirmed.

©2010 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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Fines to Enforce Restrictions OK if in Governing Docs

Farran v. Olde Belhaven Towne Owners Association, No. CL-2009-11786, Va. Cir. Ct., July 8, 2010

Covenants Enforcement/Use Restrictions/Architectural Control: A Virginia court determined that the levy of fines to enforce restrictive covenants was limited to situations where the fines were expressly authorized in the declaration.

Samir and Maria Farran bought property in Olde Belhaven Towne Owners Association. 

In 2009, the association's board of directors enacted a resolution that allowed the board to enforce use restrictions by levying fines. Prior to adopting the resolution, the association had never fined homeowners to enforce the use restrictions. The declaration only provides for enforcement actions, "by any proceeding at law or in equity." 

Believing that the resolution exceeded the association's authority under its governing documents, the Farrans sent several letters to the association requesting that the resolution be appealed. The board refused to do so. 

During the time of this dispute, the Farrans submitted a request for approval to add a new roof and deck to their home. The association's board of directors denied their request, even though the architectural control committee had taken no action. The architectural guidelines provide that members may appeal the committee's decisions to the board of directors. The Farrans maintained that the board had only appellate authority to review the committee's determination; and, therefore, its denial of their architectural request was ultra vires and arbitrary. 

The Farrans sued the association, seeking a declaratory judgment and injunction, alleging that the association exceeded its authority by enacting the penalties resolution and denying their request for architectural approval. The association filed this demurrer.

The association contended that the Virginia Property Owner's Association Act ("Act") expressly authorized the association to impose fines such as those included in the penalties resolution. The Act states:

The board of directors shall also have the power, to the extent the declaration or rules and regulations duly adopted pursuant thereto expressly so provide, to . . . assess charges against any member for any violation of the declaration or rules and regulations. . .

The Farrans argued that the Act limited the board's authority to impose fines unless the declaration expressly authorized such action. The Farrans also claimed that the Act did not apply to the association because Section 55-508(A) of the Virginia Code states that the Act, "shall not be construed to affect the validity of any provision of any prior declaration; however, to the extent the declaration is silent, the provisions of this chapter shall apply."

The association claimed that the Farrans misconstrued the Act. It asserted that the Act created two instances under which an association can impose fines: (1) if the declaration expressly provides for the imposition of fines; or (2) if rules and regulations are adopted pursuant to the declaration provide for the imposition of fines. The association contended that the board had the power, pursuant to the declaration, to enforce its rules and regulations. 

The court stated that property owners associations and their members must abide by their governing documents. Although the Act does grant associations the authority to impose fines in certain circumstances, that authority is limited to situations where the declaration expressly allows it to impose fines or expressly allows it to adopt rules and regulations which impose such fines. The court concluded that neither situation applied, and the omission of a provision in the declaration allowing the association to impose fines as a method of enforcement showed an intent to exclude. 

The Farrans also claimed that the association acted without authority when it denied their architectural request. They argued that because the declaration gave the architectural committee authority to review and approve architectural requests and gave the board appellate review over the committee's decisions, the board did not have jurisdiction to deny their request. The association claimed that nothing in the governing documents gave the committee exclusive jurisdiction to approve architectural requests.

The declaration specifically states that no structure may be built without approval, "by the Board of Directors of the Association, or by an architectural committee." The court held that the language in the declaration was clear: either the board or the committee may approve architectural requests. 

The Farrans argued that the court's reading of the declaration rendered the bylaws meaningless, and that allowing both the board and the committee to approve requests rendered the architectural guidelines meaningless because they provided for appeal from the committee's decision. However, the court disagreed, because the declaration provides that if there is any conflict between the declaration and the bylaws, the "Declaration shall control, rule and take precedent over the By-Laws." In fact, the court found no conflict between the documents. Granting both the board and the committee authority to approve architectural requests did not render the guidelines meaningless; rather, it simply created a system of concurrent jurisdiction.

The court found that the Farrans failed to sufficiently plead that the association's denial of their architectural request was ultra vires and sustained the association's demurrer. However, it overruled the demurrer with respect to the penalty resolution and gave the Farrans 21 days to amend their complaint.

©2010 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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Association Can't Charge Easement Holders Beach Fees

Gineo v. Old Colony Beach Club Association, Inc., CV084008770, Conn. Super. Ct., July 7, 2010

Developmental Rights/Municipal Relations: A Connecticut trial court ruled that a municipal association was entitled to implement policies to secure a private beach for the use of residents, but could not charge a user fee to non-residents whose deed contained express easements for access to the beach.

Old Colony Beach Association is a specially chartered municipality located in Old Lyme, Conn. It has powers of governance set forth in its charter. The association owns and maintains Old Colony Beach, a private beach that is for the exclusive use of the association's residents and some individuals who were deeded access and use of the beach. 

Wayne Gineo represents those individuals who were granted deeded rights of access and use of the beach. These individuals  comprised  two classes: Charter Oaks and Soundview.

In 1904, Soundview Land Company conveyed parcels to the Soundview residents, or their predecessors in title, that included rights-of-way over Colony Road to access the beach front owned by Soundview Land Company. Soundview then conveyed all land east of the rear property lines of the Soundview residents to the association. 

The Charter Oak parcel was originally owned by Edward Lyons and included a section of what is now Colony Road. When Lyons conveyed land from the Charter Oak parcel to the Charter Oak residents, he included easements over private streets in the Charter Oak parcel to access the beach. Subsequently, Lyons conveyed the streets to the Town of Old Lyme, and the Charter Oak residents retained their deeded rights to access the beach.  

The association provides maintenance, insurance and security for the beach. It taxes its residents for costs associated with governing the municipality annually. Residents have the right to vote on issues affecting the association. Even though they use the beach, Soundview and Charter Oak residents do not pay the association for maintenance and upkeep. 

The association installed gates along the beach access road. To enter the beach from outside the association's territorial boundaries, Soundview and Charter Oak residents must use a keycard. All the association's residents are issued keycards. Charter Oak residents and Soundview residents had a difficult time obtaining a sufficient number of keycards, restricting their ability to access the beach. All people who entered the beach were also required by the association to display an umbrella sticker.

Gineo sued the association, seeking declaratory and injunctive relief barring the association from assessing a user fee and from interfering with access to the beach. The issues considered by the court were (1) whether the association was entitled to erect gates and require the use of keycards and umbrella stickers as a way of securing and restricting access to the beach if those procedures were inconvenient to Gineo; and (2) whether the association could charge Gineo a reasonable user fee when they had been granted a deeded easements to access and use the beach, without any mention of a user fee contained in the deeds.

An easement creates a non-possessory right to enter and use land that is in another's possession. It generally authorizes limited use of the burdened property for a particular purpose. In this case, the association did not contest that Gineo was given an easement to use the beach. Rather, the dispute arose over whether the association could erect gates and other security measures as a means of restricting the public's ability to enter the beach when such restrictions inconvenienced Gineo's enjoyment of the beach.

The court held that the owner of an easement is entitled to relief upon a showing that he will be disturbed or obstructed in the exercise of his right; however, granting injunctive relief rests with the discretion of the trial court, and its action will not be disturbed unless it abuses its discretion. The court noted that a beach easement is more than a mere right of access; it involves the more sensitive rights of recreational use, enjoyment and pleasure implied in using the easement. The court considered Gineo's right to unobstructed enjoyment of the beach in light of the association's right to restrict the public's access. 

The Special Act of 1947 provides that, "The Old Colony Beach Club Association . . . may purchase, acquire, or own real estate, and the governing board may enact by-laws or ordinances for the following purposes . . . to care for beaches and water fronts . . . [and] to restrict the right of entry on the property of said association except upon the highways." This right, in combination with the association's right, "to acquire, construct, maintain and regulate the use of recreational facilities," gives the association the right to restrict the general public's entry onto the beach. 

The evidence at trial indicated that the association implemented the policies to provide security to those using the beach and to prevent the general public from gaining access. The policies implemented apply equally to the association's residents and residents of Soundview and Charter Oak. Therefore, any inconvenience suffered by Gineo in complying with the policies was also suffered by the association's residents. Further that inconvenience seemed minimal in light of the benefits obtained by such policies. Given the equities of the situation, the court denied Gineo's request for injunction barring the association from erecting gates and imposing other security measures. 

Whether the owner of a private beach can charge a reasonable user fee to those people who have a prior express easement to use the beach was an issue of first impression. The association charged residents to maintain the beach, but it cited no legal authority for its position that it was entitled to charge the easement holders a user fee. Further, the court's own research did not disclose any legal authority on point. The court observed that existing law permits a municipality to charge a fee for use of its public recreational beaches and facilities and permits a district to tax property owners within its territorial boundaries for expenses of maintenance and upkeep, but no law exists permitting a district to charge a fee to persons who live outside the district's boundaries but have an express easement to access and use the district's private beach.

Because the Soundview and Charter Oak residents had rights of access and use that were recorded as express easements, the court examined the terms of the easements to determine if a user fee was contemplated by the granting parties. A review of the easements held by both the Soundview residents and the Charter Oak residents indicated that the original grantors of the easements, Soundview Land Company and Lyons, respectively, did not intend that the original grantees, or their successors in interest, would pay a fee to access and use the beach.

The court found that Gineo had a right of access and use of the association's beach that was set forth in their deeds, and the association was enjoined from charging them a user fee for exercising their rights. The court further ordered the association to distribute keycards and umbrella stickers to all easement holders and their guests, at no charge, and to supply replacement cards and stickers to persons at the association's cost.

©2010 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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Failure to Ask for Jury Trial Found as Waiver of Right

Lakeshore View Homeowners' Association v. Tu, No. A123298, Calif. App. Ct., Aug. 17, 2010

Attorney’s Fees: A California court affirmed a ruling from the bench in a condominium association's favor, finding that the homeowner waived her right to a jury trial by not expressing her request in a timely manner.

Lakeshore View Homeowners' Association is a condominium overlooking Lake Merritt in Oakland, Calif. The association levied several assessments for repairs to condominium units and determined the order in which the repairs were to be made. 

Pin Lian Tu owned one of the units and stopped paying assessments because she disagreed with how some of the repairs were handled. The association placed a lien on the unit to secure payment of the assessments and sued her to foreclose the lien in 2007. She filed a cross complaint, alleging conversion, breach of contract, negligence and abuse of process, seeking damages in excess of $70,000 and punitive damages. In 2008, the court awarded the association $27,584.63 and Tu $4,000 for unfinished work on the interior of her unit, which it applied as a set-off against the amount she owed the association. The court ordered Tu to pay the resulting net judgment within 30 days or her unit would be sold at public auction. The court also ruled that the association, as the prevailing party, was entitled to seek attorney's fees. Tu appealed. Subsequently, she filed a bankruptcy petition that was dismissed because she failed to provide the required documents to the bankruptcy court and attend bankruptcy counseling.

In the meantime, the association filed a motion for attorney's fees, which the court awarded in the amount of $65,707.80. Tu appealed. Sale of her unit stayed pending until the outcome of the appeal. 

On appeal, Tu claimed that she never waived her right to a jury trial; and therefore, the trial court erred when it proceeded with a bench trial. The court carefully considered the precise procedural chronology of the issue. 

When the case was called for trial in April 2008, neither party appeared, and Tu had posted no jury fees. The court reset the trial date  for June 2008, stating: "Counsel for defendant having been relieved . . . the court on its own motion orders the Jury Trial dropped and the matter will be reset as a Court Trial . . . " The record did not indicate why. Although Tu filed a document entitled, "Objection to the Court Order Setting Aside the Case for a One-day Court Trial and Request for a Jury Trial" in May 2008, she did not file a motion to restore the case. Six weeks later, more than two weeks after the deadline, she deposited the jury fees. 

The case proceeded to trial in June 2008; and, at the outset, the court discussed preliminary procedure with both parties. Tu said nothing at the time about her previously filed objection to a court trial, and there was nothing in the record to indicate the court was aware of it. Neither did she disclose to the court that she had deposited jury fees, and she made no objection then to proceeding with trial before the court. 

Because she failed to deposit jury fees within the allotted deadline, it was undisputed that she waived her right to a jury trial. The appeals court observed that a party cannot appear for trial, remain mum about relief from a jury waiver, try the case before the court without objection, and then, after suffering an adverse decision, tell the court for the first time the case should have been tried before a jury. Consequently, the trial court did not abuse its discretion in denying relief from jury waiver. 

Tu did not take issue with the trial court's ruling that the association was the prevailing party in the suit and entitled to recover attorney's fees. However, she contended that the trial court abused its discretion in the amount of the award, complaining that the amount of the award was almost three times the amount of the judgment. The association argued that the trial court properly calculated the award and pointed out that it was $40,000 less than the amount requested in its motion. 

Although Tu claimed that the association's fee award was punitive and unreasonable, she identified no specifics about why it was excessive. Accordingly, she did not meet her burden to show an abuse of discretion by the trial court. 

She next argued that the trial court erroneously awarded fees for work done by the association's attorneys in defending her cross-complaint. However, the trial court explained that her cross-claims were, "interrelated with the association's valid suit to collect unpaid assessments." The court noted that when work on a non-fee claim is so closely related to work on a fee claim that apportionment is impossible or impracticable, courts can award fees for the entire case or make a reduction that reflects the sound judgment of the court. Here, the trial court reduced the amount of fees requested by the association to reflect the limited success of Tu's cross-claims. 

Tu further argued that the trial court did not sufficiently reduce the award to reflect "block billing" on portions of the invoices. However, she cited no authority that "block billing" was legally insufficient to support a fee award. The appeals court concluded that the trial court's assessment was well within its sound judgment. 

Tu then argued that the court failed to reduce the award to account for double time entries and failed to consider her financial resources in determining the amount of the award. Again, she never raised these issues at trial; therefore, the trial court had no evidence in this regard and did not abuse its discretion. 

The judgment in favor of the association and the order awarding the association attorney's fees was affirmed. 

In a concurring opinion, Judge Dondero wrote separately to clarify his view that the evidence supported the court's conclusion that Tu waived her right to a jury trial. In his opinion, her failure to request a jury trial when she appeared pro per before the trial court and her continued reluctance to advise the court she wanted a jury trial as the matter proceeded amounted to legal waiver of the right. 

However, he stated that adherence to a statutory time limitation for posting fees in dealing with constitutional rights, especially when dealing with pro per litigants, could amount to excessive formalism. He further stated that trial courts serve the public, and the rights of self-represented parties should not always be evaluated by dates on a calendar. Quoting California case law, he expressed that, "[W]e need to remember that all of us are here to serve the public and that this cannot be done when judges are inundated with fast-track statistics and cheerleader attitudes about case disposition numbers which never seem to take into account the rights of the parties."

Yet, Judge Dondero also recognized that to realize their rights, it is incumbent upon the moving parties to assert their claims. Tu's silence was not an enabler for reversal in this case because she was aware of her options and made the decision to proceed without speaking up when she should have. 

©2010 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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Association Negligent for Failing to Repair Defect

O'Sullivan v. The Greens at Gateway Association, No. 290126, Mich. App. Ct., August 12, 2010

Risks and Liabilities/Developer Liability: A Michigan court ruled that a condominium association had a duty to repair the developer's construction defects, which resulted in a unit owner's injuries.

The Greens at Gateway Association is a condominium complex in Wayne County, Mich. Beth O'Sullivan purchased a unit there in 2001. She immediately noticed a problem with excessive drainage from the roof of her unit that caused water to overflow the gutters and spill onto her porch. Despite her complaints to the developer, the drainage issue was never resolved.

In January 2005, the developer relinquished control of the association's board of directors. In February, ice formed on the walkway at the base of the steps leading to O'Sullivan's unit as a result of the faulty drainage problem. When she stepped off her steps onto the walkway, she fell on the ice, sustaining serious injuries. She sued the association, claiming various causes of action, including premises liability, nuisance, and negligence.

The association moved for summary judgment, arguing that the icy condition of the steps was open and obvious, and no special circumstances existed to remove it from the protections afforded by the open and obvious doctrine. The association also asserted that O'Sullivan could not show that the association's failure to remedy the defective condition caused her injuries. 

The trial court ruled that the developer had a duty to use care in constructing the condominium units that could not be subsumed into a premises liability theory, but the association could not be held liable for the torts of the developer unless O'Sullivan could show that the association had a duty contemporaneous with the owners' takeover of the board. 

During the oral argument on the association's motion for summary judgment, O'Sullivan withdrew her premises liability claim, but retained her claims for nuisance and negligence. The trial court determined that both remaining claims were, in essence, versions of the relinquished premises liability claim, and granted the association's motion. O'Sullivan appealed.

In her appeal, O'Sullivan argued that the trial court erred in determining that her action was a premises liability claim disguised as a claim for negligence or nuisance. The appeals court agreed. The court explained that a premises liability claim emanates from a person's duty as an owner of land. O'Sullivan correctly recognized that her action did not involve a premises liability claim, because she owned the property on which the injury occurred. She maintained that the association caused her injuries because it failed to correct the roof and gutter conditions that caused her porch and walkway to become icy and slippery, which constitutes a negligence claim. 

O'Sullivan's nuisance claim was grounded in the association's interference with her use and enjoyment of her property. The Michigan Supreme Court described nuisance as being, primarily, a condition not predicated on tortious conduct, but which may result, even with due care, in a dangerous, offensive or hazardous condition. 

The appeals court explained that a person must establish significant harm resulting from the unreasonable interference with use or enjoyment of his or her property to prevail in a claim of nuisance. The court observed that O'Sullivan's allegation that the condition of the property interfered with her use and enjoyment arguably established a nuisance claim. However, because her claim was principally based on the association's failure to act, the court found it better fit a negligence theory. Although the court found there to be some overlap in O'Sullivan's claims for negligence and nuisance, it determined that the two causes of action had distinctively different elements, and O'Sullivan adequately set forth a basis for each. 

The court concluded that the trial court improperly categorized O'Sullivan's claims as all being based on the premises liability theory, but that finding, alone, did not resolve the matter. Instead, the question became whether O'Sullivan's claims for nuisance and negligence could withstand summary disposition and whether her claims were barred by statute. 

Although O'Sullivan's claim was based on a condition that could be viewed as unreasonably interfering with her property, the association argued that, pursuant to Michigan's Condominium Act, it could not be held liable for nuisance because it did not design or build the defective roof and gutter. The statute provides as follows:

Neither the association of co-owners nor the co-owners, other than the developer, shall be liable for torts caused by the developer or his agents or employees of the developer within the common elements.

The court, however, found that the statute does not provide general immunity for an owners' association, but immunizes it from liability for torts caused by the developer. Although the association assumed control over the common elements, the statute exempts the association from liability that was caused by the developer. The faulty roof design of O'Sullivan's unit was caused not by the association, but by the developer. Accordingly, the appeals court concluded that the association was entitled to a summary disposition of O'Sullivan's nuisance claim. 

O'Sullivan next asserted that the trial court's summary disposition of her negligence claim was inappropriate. To prevail in a cause of action for negligence, a person must prove that (1) the defendant owed a duty to the plaintiff; (2) the defendant breached its duty; (3) the defendant's breach proximately caused the plaintiff's injury; and (4) the plaintiff suffered damages.

O'Sullivan contended that the association had a duty to maintain the common elements in a safe manner, that it breached its duty by failing to correct the gutter and roof defect, and she was proximately injured by the association's breach when she fell on the ice patch that accumulated as a result of the gutter overflow. 

Again, the association argued that Michigan's condominium statute barred any liability for negligence because the roof and gutter defect was caused by the developer. However, the court iterated that the Condominium Act did not provide blanket immunity to the association; it only negated liability for tort caused by the developer. 

The appeals court raised the question whether a negligence claim could be attributed to the developer when the plaintiff's injury allegedly arose from the association's failure to correct a potentially dangerous defect that was caused by the developer. It concluded that the question required consideration of the association's duties to the individual unit owners and the effect  the developer turnover had on the association's exposure to liability. 

Although they had not previously directly addressed the question raised, it noted that it was well established that a landlord owes a duty of care to tenants with respect to common areas of leased premises that are under its control. The court found that this reasoning applied with equal force to the association's duty of care to its members. Pursuant to its bylaws, the association had exclusive control of the condominium common areas, including the roofs and gutters of the units. Individual unit owners were not permitted to make repairs and alterations to these common areas. The association's failure to correct the recurring overflow problem after the developer relinquished control of the association's board was not caused by the developer.  Thus, the court concluded that the association was liable for its own failure to correct the condition that caused the hazard. 

The association contended that there was no evidence that it breached its duty to O'Sullivan, but it did not raise this defense as a basis for dismissing O'Sullivan's claims in its motion for summary judgment. Under Michigan law, the motion must specifically identify the issues that the moving party believes present no genuine issue of material fact. Because the association did not identify this issue, O'Sullivan had no obligation to produce evidence to establish a genuine issue of material fact as to this element. 

The association also argued that O'Sullivan could not establish a genuine issue of material fact regarding causation. It maintained that O'Sullivan merely speculated that the icy patch resulted from the gutter overflow. However, the court disagreed. The association argued at trial that it had no duty to protect O'Sullivan from the open and obvious hazard of the icy patch. The appeals court, however, held that the open-and-obvious danger doctrine only applied to premise-liability claims involving a failure to warn and did not apply to claims of ordinary negligence. Accordingly, to the extent that O'Sullivan's claim was properly viewed as one of ordinary negligence, the doctrine did not apply.

O'Sullivan offered evidence of a recurring pattern of overflow from the defective roof and gutters. She offered evidence that she reported the problem to the association before her fall and provided photographs showing an accumulation of ice on her walkway and porch. Evidence by other unit owners was presented that indicated other owners were aware of the drainage problem and the icy conditions resulting from the problem. This evidence was sufficient to allow the court to infer that the ice patch on which O'Sullivan fell formed as a result of the construction defects. Moreover, O'Sullivan testified that it had not rained or snowed on the day of the accident, thereby excluding other likely explanations for the icy condition of her steps and walkway. The association did not offer any alternative hypotheses for the ice formation. 

The appeals court found that, at the very least, questions of material fact existed regarding causation that precluded summary judgment. 

The court affirmed the trial court's order granting summary disposition to the association with respect to O'Sullivan's nuisance claim, but reversed the order granting the association summary disposition on her negligence claim. It remanded the case for further proceedings consistent with its opinion, but did not retain jurisdiction.

©2010 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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Association Not Entitled to Easement on Withdrawn Land

Wellington Condominium Association v. Wellington Cove Condominium Association, No. NC-2007-0353, R.I. Supr. Ct., Aug. 25, 2010

Developmental Rights: A Rhode Island court ruled that a condominium association did not have an easement across property withdrawn from the initial condominium to access its tennis courts and an intersecting street.

In 1986, Wellington Hotel Associates filed a Declaration of Condominium that created Wellington Yacht & Racquet Club on Newport Harbor in Newport, R.I. The declaration established Wellington Condominium Association ("plaintiff"). 

The declaration submitted the full property to the Rhode Island Condominium Act. It provided that the property could be developed in phases and portions could be withdrawn from the condominium. 

In 1989, Wellington Hotel Associates (the declarant) assigned Newport Partners the right to withdraw and develop Phases IV and VI of the condominium. In 1992, Newport Partners filed the Third Amendment to the Declaration of Condominium ("Third Amendment"), which provided for withdrawal of the phases. The remaining phases of the full property constitute the property owned by Wellington Condominium Association, the plaintiff in this action. The withdrawn property constitutes the property owned by Wellington Cove Condominium Association, the defendant.

The Third Amendment did not, by its terms, create or reserve any easements between or over the property owned by either association, nor did it grant either association or their members any rights to use the proposed marina, which was depicted on the original recorded plat of the condominium. 

Within the plaintiff's property, asphalt areas intended for vehicular traffic include a north/south axis that connects two public streets and provides access to the plaintiff's tennis courts. The plaintiff claimed an easement and right-of-way across that portion of road within the defendant's property. After 1989, the plaintiff placed a chain across the opening onto one of the public streets and installed speed bumps. In 2008, they replaced the chain with a gate that was locked from time to time to prevent access to and from the axis road. 

In 2005, the defendant placed a chain at the southerly end of the road near the common boundary, impeding vehicular and pedestrian access. In 2006, it replaced the chain with heavy plastic barriers that blocked vehicular traffic and impeded pedestrian traffic.  The plaintiff communicated to the defendant its claim that its members were entitled to use the right-of-way to access the tennis courts and marina; however, the defendant refused to remove the barriers and posted a sign, which stated that all parking spaces were reserved.

The plaintiff maintained that the declaration either created or resulted in the creation of an express easement over the defendant's property at the time of its withdrawal from the full condominium property.

In June 2010, the plaintiff sued the defendant, asserting that it owned an express easement and reservation across the claimed right-of-way; and, in the alternative it was entitled to an implied and/or prescriptive easement. The defendant counterclaimed for trespass. 

The declaration provides that, "the Declarant will provide reasonable rights of way over and across the real estate withdrawn necessary to provide adequate access to any amenity located in, by, along or adjacent to Narragansett Bay." However, at the time the property was withdrawn, there was no amenity "in, by, along or adjacent to Narragansett Bay"; therefore, the court determined there was no need for a right-of-way to access any such amenity. 

Although the declaration provided for a utility easement whereby the declarant reserved for itself an easement over and under portions of the common elements, it provided only that the declarant could use the plaintiff's common elements to access and provide utilities to any property that was withdrawn. 

1980s aerial photographs confirmed that the disputed area had a gravel surface and there was limited vehicular use of the road prior to 1999. There was no evidence as to who used the right-of-way between 1992, when the defendant's property was withdrawn, and 1999, when the road was paved. The court concluded that plaintiff's prior use of the right-of-way was permissive.

The court further found that the plaintiff did not need to use the right-of-way to access the tennis courts and public streets. It determined that a two-foot strip between the boundary lines of the properties was adequate to access the gates on the westerly side of the tennis courts, and a curb cut/driveway located east of the tennis courts allowed direct access from plaintiff's property to public streets. 

The plaintiff also claimed an express easement across the property, but the court found that no right-of-way was created in the declaration, the Third Amendment, or any subsequent documents in defendant's chain of title. Therefore, the plaintiff failed to show it had an express easement for the claimed right-of-way. Further, because the original declarant withdrew the property and failed to reserve an easement over the withdrawn property for the plaintiff's benefit, the plaintiff failed to establish an implied easement. Additionally, the court found that the plaintiff's random and sporadic use of the right-of-way for 14 years did not establish a prescriptive easement. The court denied the plaintiff's claims in their entirety.

Although the defendant counterclaimed for trespass, seeking monetary and injunctive relief, it failed to press its claims during trial and did not move to sever the counterclaim from the plaintiff's case. Consequently, the court denied the counterclaim.   

©2010 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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Steps Constructed on Common Area Violate Covenants

Willow Lake Residential Association, Inc. v. Juliano, No. 2081099, Ala. App. Ct., Aug. 27, 2010

Architectural Control/Covenants Enforcement/Association Operations: An Alabama appeals reversed the trial court's order enjoining a homeowners association from removing steps constructed on subdivision common area.

Willow Lake Subdivision is located in Jefferson County, Ala. In 1995, Willow Lake Partnership filed the Willow Lake Residential CC&Rs that contemplated the formation of Willow Lake Residential Association to manage and govern the subdivision. Articles of incorporation and bylaws were attached to the declaration but they were never properly filed. A transition committee, consisting of nine directors, was formed by a small group of homeowners who assumed control of the association. Their election did not comply with the bylaws attached to the declaration, which provided for three directors to be appointed by the developer or elected by a majority of the homeowners. The association failed to hold annual meetings and properly appoint an architectural review committee.

Charles and Carolyn Juliano purchased a home in Willow Lake and cleared an overgrown area of land behind their home for steps leading from their property to the edge of Tom Sawyer Lake. However, both the property description in their deed and a survey later obtained by the association showed, indisputably, that their property line ended above the edge of the lake, and a majority of the steps built were on common area that bordered the lake. 

The association notified Juliano that the steps violated the restrictive covenants. It gave him the options of purchasing the common area from the association, with consent of the other homeowners, or removing the steps.  He did not accept either option and sued the association, seeking to enjoin the association from taking any action to remove the steps. He argued that the association was not properly incorporated, and its board of directors was never properly appointed. He claimed that the board had improperly collected assessments from its members, and he sought to have a receiver appointed to assume control of the association's assets. He requested that the court declare the association's governing documents void, and in other counts of his complaint, claimed unjust enrichment and quantum meruit and sought damages for trespass, slander and fraud.

The association's counsel discovered that the association had never been properly incorporated when he was investigating Juliano's claims. On Aug. 22, 2006, he filed the association's Articles of Incorporation with the Jefferson Probate Court. Because the articles he filed contained typographical errors, he filed amended them on Aug. 24, 2006. A month later, the association filed its answer and counterclaim to this lawsuit, seeking a declaration that Juliano had violated the restrictive covenants, and the association had the right to enforce those covenants and recover costs and attorney's fees. 

In January 2007, a quorum of homeowners ratified the acts performed on behalf of the association for the previous seven years. They voted 77 to 68 for ratification.

The trial court ruled in Juliano's favor and enjoined the association from removing the steps, awarded Juliano $20,000 in damages and ordered the assets of the association to be placed into receivership. The association appealed.

In its appeal, the association argued that the trial court erred in concluding that it was not acting as a corporate entity. The record showed that its articles of Incorporation were filed on Aug. 22, 2006, with the tacit consent of the members. Therefore, the court considered that the association was properly incorporated on that date.

The trial court had concluded that the association did not comply with Alabama law when it attempted to amend its articles on Aug. 24, 2006, but the appeals court held that any noncompliance with Alabama statutes affected only the validity of the amendment and not the validity of the original articles. Therefore, the trial court erred in finding that the articles were ineffective, and that error led the trial court to erroneously place the association's assets in the hands of a receiver. The appeals court reversed the judgment and remanded the case with instruction that the trial court deny Juliano's request for declaratory judgment that the articles and bylaws were void. The court also reversed and remanded that portion of the trial court's judgment that placed the association's assets into receivership.

The trial court had reasoned that the association did not have standing to enforce the declaration, because it was, as yet, not incorporated, but the appeals court noted that the association did not take legal action to enforce the restrictive covenants until after the date it was properly incorporated. The association assumed its enforcement powers at that time and had standing to enforce the restrictive covenants against Juliano. The court reversed the trial court's judgment insofar as it determined that the association did not have standing to enforce the declaration. 

The association also argued that the appeals court should reverse the trial court's declaration that the association had not acquired ownership of the common area because the deed evidenced a conveyance from the developer to the incorporated association. However, the court concluded that, had the trial court properly ruled that the association had standing to enforce the declaration, there would be no need to address its findings on the ownership issue. Therefore, the court remanded the judgment with instructions to vacate that portion of the judgment relating to ownership of the common areas.

The association then argued that Juliano built the steps on the common area that was specifically intended as a buffer zone and breached the plain language of the declaration. The declaration provides that only the developer, the architectural review committee, and the association have a right to install improvements on common areas. 

In its judgment, the trial court had found that, "the enforcement of the Covenants has been waived." Although it didn't specify its reasons for concluding the association had waived its enforcement rights, in its findings of fact, it noted that the association failed to deliver a copy of the declaration to Juliano when he purchased his lot. Regardless, the appeals court concluded that Juliano had constructive notice of the restrictive covenants because they were recorded in the Jefferson County land records and referenced in his deed to his property. Thus, the association did not waive its enforcement rights before Juliano constructed his steps. 

Juliano presented evidence showing that the association allowed certain structures to stand within the common areas surrounding the lake, and one other homeowner had built steps to the edge of the lake. However, the appeals court concluded that those facts did not establish waiver of the association's right to enforce the restrictive covenants against Juliano. In addition, the declaration specifically states that, "The failure to enforce any covenant or restriction set forth herein shall in no event be deemed a waiver of the right hereafter to enforce such covenant or restriction." The court concluded that the trial court erred in finding that the association had waived its right to enforce the declaration. 

In its judgment, the trial court maintained that Juliano's steps actually enhanced the value of the property; however, the appeals court found no evidence in the record to sustain that conclusion and, in fact, agreed with the association that any violation of a restrictive covenant, if allowed over its objection, necessarily dilutes the power of the restrictive covenants and, thereby, lessens the value of subdivision property. Moreover, Alabama case law has established that the mere breach of a covenant is sufficient basis for levy of an injunction. The trial court was reversed and instructed to vacate the injunction preventing removal of the steps.

The association sought to recover costs of the litigation, but failed to file a claim. However, because it was the prevailing party in litigation to enforce the declaration, the appeals court remanded the issue with instruction that the trial court consider the appropriate amount of costs recoverable by the association. 

In other counts of his complaint, Juliano asserted unjust enrichment, fraud and quantum meruit claims and the trial court had awarded him $20,000, based partially on those claims. It was apparent to the appeals court that when Juliano paid his annual assessments, he did not rely on any representation that the association was a corporation and was not misinformed by anyone that the association was a corporate entity. As for the theory that the association was unjustly enriched by construction of the steps, that claim failed when the court concluded that the association did not receive any benefit from construction of the steps. 

The court inferred from the record that Juliano evidently sought to be compensated by the association for clearing the common area under the theory of quantum meruit, which is a request for equitable relief based on the principle that if one knowingly accepts a service from another and benefits from that service, it implies a promise to pay the reasonable value of such service rendered. The association argued that Juliano was barred from recovering under the doctrine of unclean hands. The appeals court held that the association waived its argument by failing to explain how the doctrine applied. Thus, the court determined the trial court did not err by failing to bar recovery on the basis that Juliano had unclean hands. 

The association argued that the record did not contain evidence to support the amount of damages the trial court awarded to Juliano, and Juliano did not offer any evidence to support the costs incurred for clearing the property or evidence as to the reasonable value of the clearing services. Without such evidence, the appeals court found no basis in the record for an award of damages, and, thus, reversed the award.

Juliano claimed that the association slandered him in letters sent to members of the association. The court observed that the letters merely informed the members of the status of the ongoing dispute with Juliano. It noted that statements must be false and defamatory to sustain a cause of action for libel. Moreover, communications among directors of a homeowners association and the homeowners regarding an ongoing dispute that could result in an increase in dues paid by the homeowners are protected communications under Alabama law. The trial court's award of damages to Juliano on his libel claim was reversed. 

Juliano asserted that he had a right to access and use the common area behind his property. He claimed that the association had impaired that right by placing tape and barriers across the steps. The trial court's award for damages was based in part on this claim. The appeals court determined that the restrictive covenants precluded Juliano from constructing the steps on the common area; Alabama law recognizes that an easement holder generally has a right to damages for unreasonable interference with use of an easement, but only when that use is consistent with the purposes of the easement. The appeals court, therefore, reasoned that an easement holder cannot recover damages for interference with a use that violates the terms of the easement. Because Juliano had no right to build the steps, he could not claim deprivation of that right. 

He also alleged that the association trespassed on his property when it assigned someone to survey the property and surround the steps with tape, but the appeals court noted that the declaration charges the association with the duty to take all necessary action to extinguish or correct violations of the restrictive covenants, and grants the association power to enter onto any lot for that purpose.

The appeals court reversed the judgment of the trial court in its entirety and remanded the case with instructions that the court vacate its judgment and enter a new judgment granting the declaratory relief sought by the association and denying Juliano's claims. The court further instructed the trial court to conduct further proceedings to determine the costs and reasonable attorney's fees to be awarded to the association for enforcing the restrictive covenants.

©2010 Community Associations Institute. All rights reserved. Reproduction and redistribution by CAI members or nonmembers are strictly prohibited. 

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