Opinion
No. 33258-2-II.
May 23, 2006.
Appeal from a judgment of the Superior Court for Pierce County, No. 04-2-14770-2, D. Gary Steiner, J., entered May 3, 2005.
Steven Goldstein, Betts Patterson Mines PS, 701 Pike St Ste 1400, Seattle, WA 98101-3927.
Michael Wayne Johns, Davis Roberts Johns PLLC, 7525 Pioneer Way Ste 202, Gig Harbor, WA 98335-1166.
Mark Ronald Roberts, Davis Roberts Johns PLLC, 7525 Pioneer Way Ste 202, Gig Harbor, WA 98335-1166.
Counsel for Respondent(s), James Benjamin II Meade, Forsberg Umlauf, 950 Pacific Ave Ste 400, Tacoma, WA 98402-4441.
Reversed by unpublished opinion per Quinn-Brintnall, C.J., concurred in by Armstrong and Van Deren, JJ.
Canterwood Homeowners Association (Association) sued Hill Design Construction, Inc. to recover fines levied for covenants, conditions, and restrictions (CCR) violations and to enjoin Hill from further construction in the Canterwood residential community until it cured certain building violations. Hill countersued, alleging that Canterwood's Architectural Control Committee (ACC) was improperly constituted and its actions void.
Relying on RCW 24.03.115 and Hartstene Pointe Maintenance Association v. Diehl, 95 Wn. App. 339, 979 P.2d 854 (1999), the superior court granted Hill summary judgment. Because the record does not establish that Canterwood's ACC was improperly constituted, we reverse and remand for trial.
FACTS
The Association is a nonprofit corporation formed to provide for the 'maintenance, preservation, and architectural control' of the Canterwood residential community. 2 Clerk's Papers (CP) at 308. The Association's articles of incorporation, filed in 1981, provide for a board of directors to manage the Association's affairs. The articles of incorporation also provide that Canterwood property owners are members of the Association with certain voting rights. Those rights include changing or repealing board actions, dissolving the corporation, and amending the articles of incorporation.
In 1988, the Canterwood membership amended the community's CCRs. Article VIII of the amended CCRs provides: 'An Architectural Control Committee ('ACC') consisting of not less than three (3) nor more than seven (7) persons shall be appointed.' 2 CP at 328. The amended CCRs state that the membership appoints the ACC until Canterwood reaches a certain level of development, at which time the board makes the appointments. The ACC's duties include review and approval of all proposals to build or modify any structure, road, or driveway.
The CCRs are to be distinguished from the Association's bylaws, neither of which is in the record.
Hill has built several homes in Canterwood and also owns several undeveloped Canterwood lots. In 2004, the ACC fined Hill for building violations of the amended CCRs. After a series of disputes, the ACC threatened to remove Hill from its list of approved builders.
The Association sued Hill, seeking to recover the CCR violation fines and to enjoin Hill from further construction until it cured certain building violations. Hill countersued, seeking, among other things, to enjoin the Association and the ACC from disqualifying Hill as an approved builder. Hill moved for summary judgment on the Association's claims. Hill maintained that under RCW 24.03.115 and Diehl, 95 Wn. App. 339, the ACC's actions were void because the ACC did not include two members of the board. The superior court agreed and granted Hill's summary judgment motion. The court certified its order for appeal under RAP 2.2(a)(3), leaving Hill's counterclaims unresolved.
This appeal followed.
ANALYSIS Summary Judgment
Chapter 24.03 RCW governs nonprofit corporations. A board of directors manages a corporation unless a different power structure is set forth in the articles of incorporation. RCW 24.03.025(4)(b), .095; see, e.g., Barnett v. Hicks, 114 Wn.2d 879, 792 P.2d 150 (1990) (articles of incorporation provided for an enforceable veto power in one person over all board actions). A corporation's members retain rights delineated in the articles of incorporation or bylaws so long as those rights are consistent with the articles of incorporation. RCW 24.03.025, .065.
Under RCW 24.03.115, if the articles of incorporation or the bylaws allow, the board may designate and appoint committees to perform certain board functions so long as two board members sit on the committee. The acts of an improperly constituted committee are void. Diehl, 95 Wn. App. at 344-45.
RCW 24.03.115 provides in pertinent part:
If the articles of incorporation or the bylaws so provide, the board of directors, by resolution adopted by a majority of the directors in office, may designate and appoint one or more committees each of which shall consist of two or more directors, which committees, to the extent provided in such resolution, in the articles of incorporation or in the bylaws of the corporation, shall have and exercise the authority of the board of directors in the management of the corporation. . . . The designation and appointment of any such committee and the delegation thereto of authority shall not operate to relieve the board of directors, or any individual director of any responsibility imposed upon it or him by law.
As he did below, Hill argues that Diehl controls and requires that we rule in his favor. In Diehl, the homeowner challenged sanctions an ACC imposed when the homeowner cut down a tree. The homeowner maintained that the sanctions were unenforceable because the committee included only one member of the corporation's board. We agreed.
But Diehl does not apply here. Critical to our agreement that RCW 24.03.115 applied in Diehl was the fact that the ACC in that case was designated and appointed by the board. 95 Wn. App. at 342-44. The requirements of RCW 24.03.115 apply only when the board 'designate[s] and appoint[s]' the committee. Here, the record does not establish that the Association's board designated and appointed the ACC. The only reference to the ACC is in the CCRs which the Association's membership amended. The membership was given certain powers in the articles of incorporation, including the authority to appoint members to the ACC until Canterwood reaches a certain level of development, at which time ACC appointments are to be made by the board. RCW 24.03.115 does not apply to committees designated and appointed by a nonprofit corporation's articles of incorporation or membership.
The record does not reflect whether the development conditions set out in the articles of incorporation have been satisfied.
Summary judgment is appropriate only when, after reviewing all facts and reasonable inferences in the light most favorable to the nonmoving party, there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Viking Props., Inc. v. Holm, 155 Wn.2d 112, 119, 118 P.3d 322 (2005). As the party seeking to invalidate the ACC's actions, Hill had to prove that Canterwood's ACC falls within the scope of RCW 24.03.115 before Diehl applies. Viewing the record here and its omissions in the light most favorable to the Association, Hill has not shown that the acts it challenges were taken by a committee required to comply with RCW 24.03.115. On this record, the superior court could not summarily conclude that the ACC was improperly constituted and its challenged acts were void. Thus, Hill was not entitled to summary judgment on the Association's claims.
Attorney Fees and Costs
The Association requests attorney fees and costs under RAP 18.1 and the following provision of the amended CCRs:
Should the Association or any owner employ counsel to enforce any of the foregoing covenants, conditions, reservations, or restrictions, all costs incurred in such enforcement, including a reasonable fee for counsel, shall be paid by the owner found to be in violation of said condition, covenant, reservation, or restriction, or found to be delinquent in the payment of said lien or charge.
2 CP at 342. But this provision does not apply here. It requires property owners who violate the amended CCRs to pay legal fees if such fees are necessary to obtain compliance with the amended CCRs. See generally RCW 4.84.330 (where a contract allows for an award of attorney fees and costs to one party, the prevailing party is entitled to such an award even if not the party specified in the contract). The Association brought this action against Hill in its capacity as a builder, not as a resident property owner of Canterwood property. Thus, we decline to award attorney fees or costs.
Reversed and remanded.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
ARMSTRONG, J. and VAN DEREN, J., concur.