Watson v. The Village at Northshore I Association, Inc., 2018 VT 8
Ever have it when you go to a concert and you aren’t sure if the band is going to play one of your favorite songs? And then they do and they totally jam it out and you leave thinking, “That’s the best version of that song I’ve ever heard?” Even if it’s one of the band’s greatest hits? Well, friends, Watson v. The Village at Northshore I Association, Inc. is the Vermont Supreme Court version of just that. It’s about a dispute in a homeowners’ association and it’s 60 pages long. It’s like if the Eagles did a 38-minute version of “Hotel California.” Also, now would be the ideal time to make jokes tying together homeowners’ associations and “Hotel California.” This is low-hanging fruit.
I’ll do my best to keep this as brief as possible, since the opinion and dissent are quite long. Here’s the issue. Mr. Watson bought a condominium in Northshore in the 1980s. At the time, there was a condominium declaration and bylaws. The Condominium Ownership Act was the governing law. Then in 1998 the legislature passed the Common Interest Ownership Act which replaced some of the old act.
Northshore has an internal governing board, which handles the day-to-day operations and finances of the condominium association. If changes need to be made to the declaration or bylaws, each unit in the association gets one vote.
The declaration defined certain ownership interests. They covered the common elements, limited common elements, units, and unit estates. At one point Northshore decided it wanted to amend the declaration in such a way that would act to regulate the insides of homeowners’ residences, and also other outdoor spaces.
In 2014, Mr. Watson field for declaratory relief on several fronts, regarding the amendments noted above. The association moved for summary judgment on 13 issues. The court granted that with respect to several issues. The court found there were genuine issues of material fact with respect to two issues involving a garage and a fence. There was a trial in 2016, and the court found in favor of the association. Mr. Watson appealed, filing a brief and printed case that was apparently long enough that the Vermont Supreme Court used a footnote to express its displeasure with its size.
When reviewing an issue of declaratory relief, SCOV reviews de novo and has to determine whether the plaintiff was suffering a threat of actual injury to a protected legal interest. A review of a summary judgment ruling is also a de novo review, as is a review of statutory framework.
With respect to the declaration amendment regarding entry into individual owner units, the court looks to the CIOA, which governs the declaration. Entry into individual homeowner units is permitted if it’s necessary to repair or maintain common elements. This acts like an easement. If an easement is going to be expanded, it can’t materially increase the burden on the homeowner. Here, the court looked at the original declaration and amendment, and found that the amendment was too broad. It permitted entry into a unit for “any lawful purpose.” That’s way too broad. Doing my taxes is a lawful thing, but it doesn’t mean I could go into someone’s Northshore condo and do them at their kitchen table. SCOV says this particular amendment to the condo declaration is void.
Moving on, there was another issue raised about roof structures. I think we’re talking about satellite dishes here. The original declaration had a definition of “limited common elements.” This was redefined in 2008 to which include “roof structures located immediately above a Unit” as part of “limited common elements.” In other words, the roof right above someone’s home was “their” roof, in terms of structures. That same year Mr. Watson got permission to install a satellite dish on his chimney, which he put up in 2009. This was then amended in 2010 to include skylights and struck the language about roof structures. Why are they amending this declaration so much? Anyway, Mr. Watson seemed to argue that the old law governed the roof structures, not the CIOA. It also appears he argued that he didn’t consent to the change.
SCOV disagrees. The amendment was duly voted on and passed by the required number of voting units. And further, there’s existing caselaw to support the utilitarian ideal of condo associations that the association may take actions to benefit the commonality while burdening an individual. SCOV finds there is no private right of action here for Mr. Watson to bring suit.
However, SCOV also considers whether the amended declaration which governs a common interest in a condo association creates a restrictive covenant that is enforceable against the association itself. Generally, a condo declaration creates an enforceable covenant. Usually this comes up if the association is trying to enforce that provision against an individual, not the other way around. For example, I live in a HOA that has a restriction on the number of pets we can have. I have two, which is plenty. If I got a third, I’d have to get a waiver from the board or potentially face some sort of enforcement action.
SCOV says this doesn’t work in reverse. The association’s job is to enforce the restrictive covenants and manage the association’s land for the common benefit of all the landowners. There isn’t a way for an individual landowner to try to enforce restrictions upon the association. When someone buys a condominium, they do so knowing the association has the power to change and enforce restrictive covenants. A buyer does so at his or her own risk, knowing there may be an enforcement or change at some point. So SCOV affirms the trial court on this point.
Mr. Watson also raises a procedural argument about a motion for summary judgment that was filed. SCOV disagrees with his argument and reminds us how summary judgment works. Step one: determine whether there’s a genuine issue of material fact. Step two: the movant must be “entitled to judgment as a matter of law.” Once a party moves for summary judgment the court can do several things, like grant the motion for either party or grant the motion for other grounds or consider summary judgment entirely on its own. But before it does any of these things, the court has to give the parties time to respond. Which it did and it appears the parties did. And there were no genuine issues of material fact. So, it appears the court did what it was supposed to do and SCOV affirms this.
This is the 1/3 point on this case. If you want to stop reading now, I totally get it.
Next, Mr. Watson argues that he can install an antenna on his “roof structures” under an FCC rule on over the air reception devices. That rule prohibits a homeowners’ association from restricting such devices for over the air communication. The trial court didn’t think it could deal with this issue because Mr. Watson had petitioned the FCC for a ruling on it. SCOV looks at it, though because it didn’t answer the question about whether a Vermont court has jurisdiction to entertain a claim under this FCC rule. SCOV finds some caselaw from another jurisdiction that says the state court should adjudicate the state law claims. SCOV says the trial court should have dealt with this and not dismissed the case. However, SCOV also says this doesn’t go anywhere because in order to have a claim, Mr. Watson would need to have exclusive control of the roof structures. SCOV had already found that the association acted properly when it made its amendments and reclassified roof structures as common elements. Since it’s a common element, Mr. Watson didn’t have exclusive control. And because of that, he’s got no basis for a cause of action.
This next issue is kind of the big one in the case. The association approved requests by unit owners to expand their units into the attic space and airspace above their units. He argues this unlawfully altered his undivided common interest without his consent.
This turns into a two-step question. First, did this reclassification as a limited common element violate his property rights? And also, by making this change, did it necessarily give some units a greater ownership percentage of the common elements than others?
Initially, the definition of the Unit included an upper boundary of the ceiling on the highest floor. The attic and air space between the upper floor and the roof was not considered part of the unit. A person couldn’t, I suppose, store their lawn chairs in that space, because it was a common space. But some unit owners decided they wanted to expand their homes without changing the footprint by either removing the ceiling and creating a cathedral ceiling, or adding another room in the attic. Several owners were permitted to do this.
Well. This might be a problem. The 2008 Roof Structures Amendment added “attic spaces and roof structures located immediately above a unit” as a limited common element. So unit owners adding loft spaces were actually building into the common element space. This yields a weird result. That additional living space certainly increases the value of the unit, and it’s really only meant for the owner of that unit. But since it’s still in a limited common area, it’s owned in common by all the unit owners.
The question begins whether this reclassification of attic space as a limited common element violated Mr. Watson’s property rights. SCOV first considers the amendment itself. It was done by a vote of at least 2/3 of the property owners. The next question is whether this change altered Mr. Watson’s (and, presumably, others’) percentage ownership when it approved the roof expansions to certain units. Mr. Watson argues that anything changing a percentage ownership interest requires unanimous consent.
The original declaration set forth Mr. Watson’s undivided percentage ownership in the common land. By reclassifying certain land and making it exclusive, it may have the impact of changing his percentage, and that may rise to the level of a taking by the association.
SCOV says with respect to the unit owners who expanded into the attics directly above their own homes, this was okay. Even though it’s technically “limited common” under the definition, it really isn’t accessible to anybody else. Furthermore, each unit has this space, so any homeowner could choose to do this same construction. It has no impact on the other owners’ rights.
However, expanding into the common airspace above the roof, which was done by some units, was unlawful. This gets reversed. Airspace is common. One unit taking up more of the common airspace by installing a dormer necessarily changes the usage from common to exclusive, and that should not have been permitted without a unanimous vote of the ownership.
Related to this was an issue as to whether it was a violation of Mr. Watson’s property rights when the association authorized removal of ceilings, joists, and roof trusses to enable unit expansion. Some unit owners who expanded into their attic space had to remove some existing construction. There were actually some genuine issues of material fact about this, and because it was disposed of on summary judgment, SCOV says this needs to be reversed and the court needs to take evidence.
Now there’s an issue about a garage. In the early 2000s, Mr. Watson and his wife bought their neighbor’s garage and tried to record the deed. There was a problem with the chain of title, and the association understandably didn’t want to record it until the error was corrected. There was a trial on this issue, and the association prevailed. Usually SCOV gives a whole lot of deference to the lower court’s factfinding, which it does here and affirms.
There was also a trial on a disputed issue regarding whether the association had an obligation to repair a fence behind Mr. Watson’s home. The fence runs between the homeowners’ yards and the Burlington Bike Path. Mr. Watson (and perhaps some other homeowners) asked that the fence be moved closer to the bike path. The association consulted with Counsel and decided to fix the fence rather than replace it. It was fixed in 2010 and 2015. There was apparently a dispute about when this was done. The trial court found it was fixed in 2010 and 2015. SCOV gives deference to this factfinding and affirms.
Appeal Issue Number Nine (yes, we’re up to the ninth issue!). Can the association require individual homeowners to install temperature monitors?
At first, this seems pushy. Then I remembered I’m writing this in July, and we have such a thing in Vermont as “winter” which brings with it delightful things like “frozen pipes.” This amendment was apparently made after a unit became too cold, pipes froze, and a burst pipe caused something like $80,000 in damage to common areas. The original declaration required homeowners to keep their homes warm enough in winter months so this wouldn’t happen. But then the association decided to go a step further and seek to have homeowners install temperature sensors that would alert to the outside if a unit fell below 45 degrees. Watson finds this is an unreasonable new condition of ownership.
SCOV disagrees. Water pipes are a common element. The association is permitted to take steps to protect and repair common elements. The question is whether the temperature sensor rule is necessary “to prevent unreasonable interference” with other units and the common areas. Because in this condo association – like many others – the different units rely on one another for the communal preservation of the common space, it is reasonable for there to be minor inconveniences for the good of the many. A burst pipe causing $80,000 in damage arguably hurts the whole association. Requiring unit owners to have a small device – a temperature sensor – is an interference, but is comparatively reasonable. SCOV affirms.
Here comes number ten. Apparently the board requires a member who wants to address the board at a regular meeting to give 48 hours’ notice. Mr. Watson couldn’t show he was harmed by this. Although the rule exists, Mr. Watson couldn’t show that he had ever been prevented from speaking at a board meeting. The applicable statute requires giving a “reasonable opportunity” to speak. This has to be determined on a case-by-case basis. Owners have to have the right to speak, and boards need the flexibility to keep their meetings running. As applied to regular association board meetings, the 48-hour rule is fine. If the association wants to hold an Open Forum, it can’t enforce the 48-hour rule.
With Issue Eleven we’re back to a garage question. Garage spaces got redefined as “limited common elements,” and the question is whether this violates Mr. Watson’s property rights. Originally, there were garage spaces. An amendment permitted owners to reallocate their garage spaces. As noted above, Mr. Watson bought a neighbor’s garage space. After that, the declaration was amended again, changing the walls and roof of the garages from limited common elements into regular common elements. This would have the effect of reducing a unit owner’s interest. SCOV reviews the declaration and a drawing and finds that, in fact, the walls and roofs (rooves? I don’t even know at this point) were never allocated to the unit owners, so the amendment didn’t change anything. So this was affirmed.
Number Twelve. Apparently during the course of litigation Mr. Watson requested some subpoenas for depositions and documents of former and current attorneys of the association. Three were granted; two of those moved to quash. The court granted those motions for three reasons. First, the lawyers represented the association, not individual members. Second, it was privileged information. Third, failing to pay a subpoena fee voids a subpoena.
This is interesting. Well, to me, at least. The way the rule is interpreted, a subpoenant should be served simultaneously with the subpoena and the appearance and estimated mileage fee. That helps to reduce the burden on the person for appearing. Mr. Watson didn’t pay this up front. SCOV sees no reason not to affirm on this ground, so it doesn’t reach the other issues.
Last, Mr. Watson argues the trial court abused its discretion when it dismissed certain claims with prejudice that were withdrawn. SCOV says this was fine. Because Mr. Watson withdrew those claims after litigation had commenced, it would cause harm for the association to have to re-defend those claims if re-filed.
So, this goes back to the superior court for resolution of the removal of the roof structures. Judgment was entered for Mr. Watson on a couple issues. Everything else was affirmed.
Justice Robinson dissents in part, joined by Justice Skoglund.
First, the dissent is troubled by the seemingly sweeping conclusions made that an association can make a declaration amendment as long as it has a 2/3 majority (or whatever the required majority is in any given condo association). Here, the declaration itself provides that 2/3 is sufficient, but that sometimes there needs to be a unanimous vote – like, if there’s going to be a change to common ownership. Usually courts protect condo and other common-interest owners from amendments that could change ownership, or that could unfairly shift benefits or burdens. The issue is whether a purchaser would understand what their rights are, and how an association may affect those rights in the future. A buyer should be able to look at the bylaws or declaration and understand what needs to happen in order for the association to change his or her common ownership interest.
Sure, Mr. Watson bought a condo knowing that things might change. That’s kind of the deal with condos. But this classifying and reclassifying what is and isn’t common space is likely way beyond what he would have reasonably known or understood when he bought his condo.
He would have reasonably known when he bought the condo that he’d have the benefit of use of the roof, classified as a “limited common element” where he could put up a satellite dish. By reclassifying it, the association took away Mr. Watson’s (and others’) rights to do this. In theory, if 2/3 of the ownership wanted to, it could reclassify all sorts of things as “limited common elements,” which probably isn’t what people want. Nobody’s probably going on the roof, but someone might decide to hang out on someone else’s front stoop because it’s been reclassified.
The association itself is the mechanism that enforces the covenants. The dissent thinks both the association and individuals ought to be viewed as bound to the covenants.
The dissent also gets into “the ceiling is the roof” portion of the opinion. This went from a common element to a limited common element. The dissent doesn’t think the Association has the power to let individual homeowners just … make new house boundaries and turn previously-common units into extensions of their own homes. Although this really shouldn’t have an impact on Mr. Watson (presumably because he could do it, too, if he wanted to), it feels like a slippery slope that reclassification could authorize further expansion into common areas.
The bright side is that the Association has to abide by the CIOA and has a clear legal mechanism for making changes.