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Committee Activity 2014

​​​August 2014

The Lake Chalet Owners Association, Inc. v. Amber Homes, Inc. (Colorado)

The Lake Chalet Owners Association is a townhome community of 108 units located in Denver, Colorado. The Association is suffering from serious construction defects which the Association has attempted to address by filing a lawsuit against its developer/declarant, Amber Homes. Accordingly, in late 2009 and early 2010, the Lake Chalet owner-members amended the Declaration to remove the impediments which the declarant had placed there to prevent or impede the owner-members from suing them for construction defects.

The issue on this appeal is nearly identical to the issue presented in the Triple Crown at Observatory Village Association case for which CAI provided an amicus brief earlier this year. Based on the Triple Crown decision, the Lake Chalet Owners Association had their case dismissed. Lake Chalet appealed this decision with the Colorado Court of Appeals, but was unsuccessful on the central issue.

This case is primarily of importance in Colorado, however there are implications that could extend nationwide for any state that has adopted UCIOA. Section 2-117 of UCIOA states that a declaration may be amended “only by vote or agreement of unit owners of units to which at least 67% of the votes in the association are allocated, or any larger majority the declaration specifies.” This provision allows a declarant to insert self-serving language into a declaration, such as arbitration provisions, and require a 100% vote of unit owners to amend the provision. This type of declarant control defeats the policy of association self-governance.

Brief: CAI's Amicus Brief 
Prior Ruling: District Court Decision
Status: Pending
CAI Amicus Brief Author: Jesse Witt, Esq.
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Laurie Poole, Esq; Henry Goodman, Esq; Steven Sugarman, Esq.


July 2014

The Palisades at Fort Lee Condominium Association, Inc. v. 100 Old Palisade (New Jersey)

The case deals with a construction defect and consumer fraud case that involves a luxury high rise condominium building located in Fort Lee. The construction defects are specifically leaks and poor waterproofing in the rear plaza. None of the foregoing defects were disclosed in the Public Offering Statement (POS) or engineering report that was included with the POS and approved by the New Jersey Department of Consumer Affairs. 

Initially, the unit owners could not have known about the defects or taken action to remedy them because at that time, the association did not yet exist or was under control of the corporate sponsor. When the unit owners took control of the association, the first order of business was to get an engineering report after a series of leaks provided a basis for the association board of directors to be concerned and justified engaging an engineer to perform a thorough investigation. 

During the course of this litigation, the Plaintiff settled with the Sponsor and original developer as well as other contractors. The claims that remained were based upon the contractor Defendant’s defective work. Prior to trial, the contractor Defendants moved for Summary Judgment based upon the Statute of Limitations. By court order, the motion was granted, dismissing the Plaintiff’s claims. The Plaintiff moved for reconsideration but was denied. The Plaintiff appealed the courts two prior orders with the hope of recovering the remaining claims.

Brief: CAI's Amicus Brief
Prior Ruling: Superior Court Decision
Status: Superior Court ruling for CAI's Position
CAI Amicus Brief Author: Randy Sawyer, Esq. 
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Mary Howell, Esq; Steven Sugarman, Esq; David Mercer, Esq.; Thomas Schild, Esq.


June 2014

Ryan Ranch HOA v. Kelley (Colorado) 

The case arises from a dispute over community assessments and the requirements of the Colorado Common Interest Ownership Act (CCIOA), which is modeled after the 1982 Uniform Common Interest Ownership Act. CAI’s two Colorado chapters lobbied for the enactment of CCIOA in 1991, and the chapters have frequently provided testimony and guidance to the legislature and courts on questions about CCIOA since then. The specific issue here is whether CCIOA invalidates the automatic annexation language that a developer or declarant may include when recording a declaration of covenants for a new community.

Recently, Colorado’s intermediate court of appeals published a decision that effectively invalidated the annexation process that hundreds of Colorado associations have been using for many years to create common interest
communities. The full ramifications of this decision are not yet known, but this case could have negative effects among communities if not overturned. 

Supreme Court review is discretionary in Colorado. CAI’s established position as both an original sponsor of CCIOA and as a continuing leader in community association law in Colorado makes it uniquely suited to provide guidance to the justices on this subject.

Brief: CAI's Amicus Brief
Prior Ruling: Lower Court Decision
Status: Pending
CAI Amicus Brief Requestor: Jesse Witt, Esq.
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Jennifer Loheac, Esq; Marc Markel, Esq; Damien Bielli, Esq.; Robert Diamond, Esq.; Lara Anderson, Esq.

May 2014

The Glens at Pompton Plains Condominium v. Van Kleef (New Jersey)

The Glens at Pompton Plains filed a complaint against defendants based on their failure to pay common area maintenance. The defendants initially filed suite approximately two years prior against the association for “breach of fiduciary duty” which was dismissed with prejudice for failure to state a claim. The unit owners did not request ADR in that lawsuit. In the current case, the unit owners filed a motion seeking dismissal of the association’s case. The trial court dismissed the complaint and referred the case to ADR. It is the association’s position that the court erred in dismissing the complaint and that the defendant is not entitled to ADR. 

The trial court referred to the Bell Tower v. Haffert case, a prior case in which CAI also filed an amicus brief, although the court ruled against CAI’s position. In interpreting the Bell Tower case, the court believed that an association is required to provide ADR since a dispute over the payment of common area maintenance is a “housing related dispute”. In New Jersey a “housing related dispute” is subject to ADR. The court took the position that since the Bell Tower case did not say that the dispute over common area maintenance is not subject to ADR, the court had the authority to do the same.

If the Appellate Division confirms the trial court’s decision, every instance where a unit owner raises an issue in their community and withheld common area maintenance, an association would be required to provide ADR. Additionally, withholding of maintenance would affect the financial viability of the association. In New Jersey, associations are required to pay the cost of ADR, so the allegation of a “housing related dispute” would be utilized by those persons not having the funds to pay maintenance and using their requests for ADR as a stall tactic.

Brief: CAI's Amicus Brief
Prior Ruling: Lower Court Decision
Status: Pending
CAI Amicus Brief Author: Michael Karpoff, Esq. 
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Gary Kessler, Esq; Steven Sugarman, Esq; Richard Ekimoto, Esq.; Robert Diamond, Esq.


April 2014

Rosso v. Hallmark Homes (Minnesota)

The Rossos were the first purchasers of a single family home built by Hallmark Homes of Minneapolis, Inc. The home was used as a model by the builder for a period of months before selling it to the Rossos. At the time they signed the purchase agreement, they signed a Seller’s Property Disclosure Form that indicated the house was in working order. One day prior to closing, Hallmark obtained a Certificate of Occupancy for the home. Both city and state law required a Certificate of Occupancy before a home could be occupied as a residence. Ten years and six days after signing the purchase documents, but less than 10 years after the Certificate of Occupancy for the home was issued, the Rossos discovered construction defects and extensive damage to the home.

The statute of repose starts to run “when construction is sufficiently completed to that the owner or the owner’s representative can occupy or use the improvement for the intended purpose.” Minnesota law provides that “no building or structure shall be occupied or used…until the building official has issued a certificate of occupancy thereof.” This applies to single family and multi-family residences. The purpose of this certificate of occupancy is to certify that a residence has been inspected by a local building official and has been determined to be safe for occupancy.

Brief: N/A
Prior Ruling: Appeals Court Decision
Status: Court denied request to file an amicus brief
CAI Amicus Brief Author: Dave Hammargren, Esq. & Jennifer Thompson, Esq.
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Jennifer Jacobsen, Esq; Kenneth Chadwick, Esq; Mary Howell, Esq.; Robert Diamond, Esq.

March 2014

TwentyEleven, LLC v. Michael Botelho, et al (Rhode Island)

Similar in scope to the CAI amicus filings of Chase Bank v. Chase Plaza Condo in DC in December 2013 and the recently filed Nevada brief in of Bayview Loan Servicing v. SFR Investments Pool 1, LLC, the question raised in this case is whether a foreclosure of a statutory non-judicial condominium priority lien is a “true lien priority” and not merely a distributional preference in favor of the association. Additionally, the result of this appeal will have a dramatic effect on all states that have adopted a statutory non-judicial priority lien. The Rhode Island Superior Court has ruled that the foreclosure of a condominium’s statutory non-judicial priority lien does not extinguish a first mortgage, regardless of the failure of the first mortgagee to either satisfy the priority portion of the lien prior to the association’s sale, or exercise its statutory right of redemption. 

If the Supreme Court of Rhode Island affirms the Superior Court ruling that an association’s foreclosure of their priority of lien does not extinguish the first mortgage, there will be a chilling effect on association lien foreclosure sales. Individuals will not bid at an auction when the mortgagee may come back at any time to foreclose its mortgage and take the property. Also those who may take the risk of bidding at a foreclosure sale will not maintain payment of condominium assessments and will have no interest in expending money to preserve or otherwise improve the property that they could lose at any time.   

Brief: Pending
Prior Ruling: Lower Court Decision
Status: Supreme Court Ruling for CAI's Position
CAI Amicus Brief Author: Edmund Allcock, Esq.
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Thomas Moriarty, Esq; Steve Weil, Esq; Jonathan Levine, Esq.; Gary Kessler, Esq.

Bayview Loan Servicing v. SFR Investments Pool 1, LLC (Nevada)

Similar to the CAI amicus filing of Chase Bank v. Chase Plaza Condo in Washington, D.C. in 2013, the question raised in this case is whether a priority lien has true priority over a first security interest. Additionally, the trial courts that have decided that there is no extinguishment of a first deed of trust have done so on numerous, conflicting theories. For example, some have determined that “action to enforce the lien” means a judicial foreclosure is required, despite express language that allows non-judicial foreclosure. Some have stated that the priority amount is merely a “payment priority” to be paid when the deed of trust forecloses, despite no mechanism in statute to pay the priority amounts from the sale proceeds. Some have decided it is a payment priority that is only triggered when the association files a lawsuit. 

Simply put, there is no controlling law on the interpretation with approximately 100 cases pending before the Nevada Supreme Court and Ninth Circuit. The Nevada Supreme Court also recently issued an order to set oral argument in one case, but has not yet scheduled the date. Other fully briefed cases are receiving orders that they will be submitted on the brief without argument. Thus, the issue has reached a critical mass.   

CAI is filing two similar, but separate, amicus briefs on the issue of extinguishment: one before the 9th Circuit and one before the Nevada Supreme Court.

Brief (9th Circuit): Pending
Brief (Nevada Supreme Court): Pending 
Prior Ruling (9th Circuit): District Court - Order for Summary Judgment
Prior Ruling (Nevada Supreme Court): District Court Motions
​Status: Supreme Court Ruling for CAI's Position
CAI Amicus Brief Author: Thomas Moriarty, Esq.; Loura Sanchez, Esq.; Henry Goodman, Esq. 
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Henry Goodman, Esq; Steve Weil, Esq; Jonathan Levine, Esq.; Gary Kessler, Esq.

February 2014

Polston v. Pagosa Lakes Property Owners (Colorado)

CAI filed an amicus brief to join in an appeal of a recent district court judgment against the PLPOA based on the court’s (a) clear misinterpretation of the language, terms and provisions of the Association’s governing documents, and (b) clear misapplication of the law as it relates to such nuisance provisions and owners as indispensable parties in matters in which the validity of restrictive covenants in declarations are at issue.

The plaintiff had rented his residence to a church group who had several (well over ten) people residing in the house for a short period. According to the complaint, the group left curtains open exposing the neighboring units to excessive lights from the residence, made considerable noise, parked numerous vehicles on the street, and strewn trash around the residence. Upon receiving the complaint, the Association sent violations notices to plaintiff and advised that they were considering fining him and that he had the right to a hearing before any fine was implemented. The plaintiff was fined and after losing his appeal, filed a lawsuit against the association.

The plaintiff owner asserted a single claim for declaratory judgment against PLPOA stating that the nuisance provisions in both the Declaration and the Community’s R&Rs were ambiguous and unenforceable, and, therefore, PLPOA’s enforcement against the plaintiff owner was invalid. The Association’s appeal follows the district court’s erroneous entry of an order denying PLPOA’s motion to dismiss based on the failure of the plaintiff owner to name all owners in the Pagosa Lakes community as parties to the suit, and the district court’s granting of the Plaintiff’s Motion for Summary Judgment, based on a finding that the nuisance provisions of the Community’s governing documents were void and unenforceable as vague, ambiguous and/or overbroad.

Brief: CAI's Amicus Brief
Prior Ruling: District Court – Order granting motion for summary judgment
Status: Pending
CAI Amicus Brief Author: Jesse Witt, Esq. 
CAI Amicus Brief Review Committee: Stephen Marcus, Esq; Richard Ekimoto, Esq; Jennifer Loheac, Esq; Marc Markel, Esq.; Steven Sugarman, Esq.


January 2014

Triple Crown at Observatory Village Association v. Village Homes (Colorado)

On November 7, 2013, the Colorado Court of Appeals issued an order in the Triple Crown case holding that the Non-Profit Act establishes the time limit for amending its declaration based on action taken without a meeting. The impact of this decision is that community associations would have only 60 days to gather the necessary votes to amend their declarations. This decision, if it
is upheld by the Colorado Supreme Court, would make it extremely difficult for Community Associations to amend their declaration would frustrate Associations’ attempts s which were put in place before transition to homeowner control, and at self-governance.

Additionally, the Triple Crown decision runs counter to the common practices of Colorado general counsel firms who regularly assist Associations in amending their declarations. The Triple Crown decision, therefore casts doubt on the legality of declaration amendments filed by several Colorado Associations over the past year.

This case is primarily of importance in Colorado, however there are implications that could extend nationwide for any state that has adopted UCIOA. 

Brief: CAI's Amicus Brief
Prior Ruling: Lower Court Decision
Status: Motion to Dismiss 
CAI Amicus Brief Sponsor: Jeff Kerrane, Esq.
CAI Amicus Brief Review Committee: Henry Goodman, Esq; Stephen Marcus, Esq; Laurie Poole, Esq; Steven Sugarman, Esq.