Opinion
112,732.
06-26-2015
Jon L. FROBISH, Appellant, v. Cedar Lakes Village Condominium Association, a Kansas Condominium Corporation, and Simon Palmer Properties, Inc., Appellees.
Jon L. Frobish, appellant pro se. Mark G. Ayesh and Ray E. Simmons, of Ayesh Law Offices, of Wichita, for appellees.
Jon L. Frobish, appellant pro se.
Mark G. Ayesh and Ray E. Simmons, of Ayesh Law Offices, of Wichita, for appellees.
Before PIERRON, P.J., BUSER and POWELL, JJ.
MEMORANDUM OPINION
POWELL, J.
Jon L. Frobish brought suit against Cedar Lakes Village Condominium Association (Cedar Lakes), arguing that his rights under the Kansas Uniform Common Interest Owners Bill of Rights Act, K.S.A.2014 Supp. 58–4601 et seq. (KUCIOBRA), were infringed when Cedar Lakes refused to provide him with the names and addresses of other unit owners who were delinquent in their dues payments. The district court granted summary judgment for Cedar Lakes; Frobish now appeals, arguing the district court erred in its interpretation of K . S.A.2014 Supp. 58–4616. Because we agree with Frobish that the “individual unit files” exception to the mandatory disclosure provisions of K.S.A.2014 Supp. 58–4616(b) does not include the names and addresses of unit owners delinquent in their dues payments, we must reverse the district court and remand for further proceedings.
Factual and Procedural Background
Cedar Lakes is a condominium corporation located in Wichita, Kansas. Frobish is a resident and unit owner of one of the condominiums of Cedar Lakes. KUCIOBRA, which took effect January 1, 2011, requires Cedar Lakes to keep “detailed records of receipts and expenditures affecting the operation and administration of the association and other accounting records” for 5 years and to make those records available for examination and copying by a unit owner, subject to some exceptions. See K.S.A.2014 Supp. 58–4616(a)(1) and (b).
However, KUCIOBRA allows certain records retained by an association, such as “individual unit files,” to be withheld from inspection and copying. K.S.A.2014 Supp. 58–4616(c)(8). The Board of Directors of Cedar Lakes (the Board) approved a rule redacting the names and addresses of delinquent residents on records subject to disclosure, declaring such information to be part of “individual unit files.” The Board provided notice of this rule to the condominium owners; under KUCIOBRA, the owners had 60 days to object to the rule. No owner, including Frobish, objected to the adoption of the rule. Thus, following adoption of the rule, Cedar Lakes made available to any owner requesting a list of delinquent accounts: (1) the amount delinquent; (2) the length of the delinquency; (3) whether or not late charges were being imposed; and (4) the collection efforts undertaken to resolve the delinquency. However, the names and addresses of the delinquent owners were redacted from the requested forms.
After making multiple requests for the names and addresses of delinquent owners, Frobish sued Cedar Lakes, arguing he was entitled to unredacted versions of the delinquency records pursuant to K.S.A.2014 Supp. 58–4616. Cedar Lakes argued that the names and addresses of delinquent accounts were classified as “individual unit files” under K.S.A.2014 Supp. 58–4616(c)(8) and, thus, immune from disclosure. Frobish moved for summary judgment; the district court denied Frobish's motion and sua sponte granted summary judgment in favor of Cedar Lakes.
Frobish timely appeals.
Did the District Court Err in Its Interpretation of K.S.A.2014 Supp. 58–4616 ?
The principal question presented in this case is whether K.S.A.2014 Supp. 58–4616 allows a homeowners association to redact the names and address of residents who are delinquent in their dues payments from financial statements subject to mandatory disclosure.
As resolution of this question requires us to interpret KUCIOBRA, this amounts to a question of law over which our review is unlimited. Cady v. Schroll, 298 Kan. 731, 734, 317 P.3d 90 (2014). “ ‘The most fundamental rule of statutory construction is that legislative intent governs' “ if that intent can be ascertained. Nationwide Mutual Ins. Co. v. Briggs, 298 Kan. 873, 875, 317 P.3d 770 (2014) (quoting Friends of Bethany Place v. City of Topeka, 297 Kan. 1112, 1123, 307 P.3d 1255 [2013] ). We must first attempt to ascertain legislative intent through the statutory language enacted, “giving common words their ordinary meanings.” Cady, 298 Kan. at 738. When a statute is plain and unambiguous, we should not speculate about the legislative intent behind that clear language, and we are to refrain from reading something into the statute that is not readily found in its words. 298 Kan. at 738–39. Only if the statute's language or text is unclear or ambiguous do we use the canons of construction or legislative history to construe the legislature's intent. 298 Kan. at 739. “When construing statutes to determine legislative intent, [we must] consider various provisions within an act in pari materia with a view to reconciling and bringing the provisions into workable harmony if possible.” Friends of Bethany Place, 297 Kan. at 1123. Moreover, we must construe statutes to avoid unreasonable or absurd results and presume the legislature does not intend to enact meaningless legislation. Fisher v. DeCarvalho, 298 Kan. 482, 495, 314 P.3d 214 (2013).
Given the large number of Kansans who live in common interest communities or who live with homeowners associations, KUCIOBRA was enacted by the Kansas Legislature to bring uniformity to the rights and duties of unit owners, associations, and developers in order to ensure that such associations operate fairly and effectively. K.S.A.2014 Supp. 58–4601. One of the purposes of KUCIOBRA is “to address current and potential areas of conflict and tension between unit owners and associations, boards, and managers in a comprehensive and balanced manner.” K.S.A.2014 Supp. 58–4601(c). As a way to provide accountability to associations, boards, and managers, KUCIOBRA has extensive recordkeeping and disclosure requirements. K.S.A.2014 Supp. 58–4616. Financial records, board meeting minutes, organizational documents, and the names and addresses unit owners and board members are just a few of the records an association is required to maintain. K.S.A.2014 Supp. 58–4616. Moreover, subject to exceptions, an association must make such records available to unit owners for inspection and copying. K .S.A.2014 Supp. 58–4616(b).
The dispute before us involves whether records showing which unit owners are delinquent in paying their dues are subject to disclosure. K.S.A.2014 Supp. 58–4616(a), the recordkeeping provision, is central to the issue and states in relevant part:
“The association, or its agents, must retain the following for five years unless otherwise provided:
“(1) Detailed records of receipts and expenditures affecting the operation and administration of the association and other appropriate accounting records;
....
“(5) all financial statements and tax returns of the association for the past three years.”
K.S.A.2014 Supp. 58–4616(b) is the disclosure provision:
“Subject to subsections (c) through (g), all records retained by an association must be available for examination and copying by a unit owner or the owner's authorized agent.”
The commonsense plain reading of these provisions require an association, like Cedar Lakes, to keep detailed records of receipts and expenditures of its operations, which would include a ledger itemizing specific receipts (e.g., dues payments) and expenditures (e.g., expenses for lawn and pool care, street repair, and employee salaries). Such a ledger would presumably contain the date, amount, and to or from whom a payment was made. See Grillo v. Montebello Condominium Owners Assoc., 243 Va. 475, 478, 416 S.E.2d 444 (1992) (requirement of association to keep detailed records of receipts and expenditures includes specific amount of compensation paid to employees). Therefore, it would appear that under the mandatory recordkeeping and disclosure requirements of KUCIOBRA, Cedar Lakes is required to keep a record of who has paid dues and who is delinquent and such information must be available for inspection and copying by any individual unit owner. See Meyer v. Board of Managers, 221 Ill.App.3d 742, 747–49, 583 N.E.2d 14 (1991) (requirement that association keep “ ‘complete books and records of account’ “ and “ ‘all books and records' “ grants a unit owner access to a broad range of records).
Complicating our analysis, however, are the exceptions to the disclosure requirements contained in KUCIOBRA, which allow an association to exempt some records from disclosure. Significantly, these exceptions are not mandatory but discretionary:
“Records retained by an association may be withheld from inspection and copying to the extent that they concern:
(1) Personnel, salary, and medical records relating to specific individuals;
(2) contracts, leases, and other commercial transactions to purchase or provide goods or services currently being negotiated;
(3) existing or potential litigation or mediation, arbitration, or administrative proceedings;
(4) existing or potential matters involving federal, state, or local administrative or other formal proceedings before a governmental tribunal for enforcement of the declaration, bylaws, or rules;
(5) communications with the association's attorney which are otherwise protected by the attorney-client privilege or the attorney work-product doctrine;
(6) information the disclosure of which would violate law other than this act;
(7) records of an executive session of the board of directors; or
(8) individual unit files other than those of the requesting owner.” K.S.A.2014 Supp. 58–4616(c).
Cedar Lakes adopted a rule which defined individual unit files to include the names and addresses of individual unit owners who were delinquent in their dues payments, making them exempt from disclosure. The district court, in ruling as a matter of law that the individual unit files exception allowed Cedar Lakes to redact the names and addresses of those in arrears in dues from its disclosures, held that the phrase “individual unit file” should be interpreted within the class of the more specific terms listed above it that an association may also opt to withhold, meaning that the seven items contained alongside the individual unit exception were documents that would normally and practically be considered private. Having made these determinations, the district judge held that individual unit files, as a matter of law, included the financial delinquency files of residents.
On appeal, Frobish argues the district court erred in its interpretation of K.S.A.2014 Supp. 58–4616, claiming that the provisions of K.S.A.2014 Supp. 58–4616(a) and (b) unambiguously require disclosure. In support of the district court's reasoning, Cedar Lakes argues the fact that a unit owner is delinquent on his or her obligations is a matter of privacy that should be protected in the same manner that KUCIOBRA protects other sensitive information. Cedar Lakes contends that interpreting individual unit files to include the names and addresses of delinquent unit owners is reasonable when viewed in the context of the entire list of optional withholdings contained in K.S.A.2014 Supp.58–4616(c).
While we cannot agree with Frobish that a simple reading of K.S.A.2014 Supp. 58–4616(a) and (b) in isolation resolves the question because the term individual unit files in K.S.A.2014 Supp. 58–4616(c)(8) was left undefined by the legislature, thus inherently creating ambiguity, and while we also acknowledge the district court's approach was a reasonable one, we must disagree with Cedar Lakes' and the district court's conclusion regarding the scope of individual unit files.
K.S.A.2014 Supp. 58–4616(c) allows associations to opt out of disclosing private information such as personnel, salary, and medical records, issues related to impending litigation, contract negotiations, information protected by the attorney-client privilege, and other disclosures which would otherwise be illegal. The list in subsection (c) appears to allow an association to comply with already-established privacy obligations such as those surrounding medical records or the attorney-client privilege. We are unaware of any comparable privacy obligation protecting the fact that a unit owner is delinquent in payment of his or her association dues. Given that any unit owner whose dues are delinquent can be sued for payment and that such a lawsuit would be a public record, we question an expectation of privacy in such information. Also, unlike the recordkeeping and disclosure provisions, KUCIOBRA makes the exemptions optional, meaning that disclosure is preferred over secrecy. See generally Pomerance v. McGrath, 104 A.D.3d 440, 441, 961 N.Y.S.2d 83 (2013) (unit owners right to inspect similar to shareholders common-law right to examine corporation's books).
Moreover, as we have already explained, one of the stated purposes of KUCIOBRA is to address current and potential areas of conflict and tension between unit owners and associations. The collection of association dues is fundamental to the operation of common interest communities, and significant arrearages or delinquencies, particularly among key unit owners such as board members, could greatly undermine an association's operations. Disclosure furthers the effective operation of common interest communities by providing accountability to the board and to individual unit owners. See Meyer, 221 Ill.App.3d at 748 (right to inspect enables unit owner to protect interests).
Accordingly, we conclude the individual unit file disclosure exception listed in K.S.A.2014 Supp. 58–4616(c)(8) does not permit Cedar Lakes to redact the names and addresses of unit owners who are delinquent in their dues payments. An administrative resolution adopted by Cedar Lakes cannot defeat a statutory right created by the legislature. See Grillo, 243 Va. at 478 (association enacted rule exempting employee compensation information from “books and records” invalid). While we elect not to define the scope and breadth of individual unit files in this opinion, we hold that individual unit files do not include the names and addresses of delinquent unit owners. See also Shamrock Glen Owners' Ass'n. v. Evans, No. 1 CA–CV 13–1056, 2014 WL 1408261, at *1 (Ariz.App.2014) (unpublished opinion) (unit files included signed waiver agreement, satisfaction of dues obligations, and “other documents”).
Is Frobish Time Barred from Challenging the Validity of the Actions of the Association's Board of Directors?
Setting aside the merits of the question before us, Cedar Lakes also argues that K.S.A.2014 Supp. 58–4612(j) bars Frobish from bringing this lawsuit because he waited more than 60 days to challenge the Board's enactment of a rule including individual names and addresses of delinquent unit owners in the definition of individual unit files. Frobish counters that K.S.A.2014 Supp. 58–4612 deals exclusively with procedural requirements to enact a rule, and therefore, the 60–day time limit applies only to issues stemming from a violation of such procedural requirements.
K.S.A.2014 Supp. 58–4612 provides rules and restrictions for meetings of the board of directors and committees of the association. Specifically, K.S.A.2014 Supp. 58–4612(j) states:
“Even if an action by the board of directors is not in compliance with this section, it is valid unless set aside by a court. A challenge to the validity of an action of the board of directors for failure to comply with this section may not be brought more than 60 days after the minutes of the board of directors of the meeting at which the action was taken are approved or the record of that action is distributed to unit owners, whichever is later.” (Emphasis added.)
We agree with Frobish that the legislature specifically limited the contents of subsection (j) to the other rules and restrictions contained in K.S.A.2014 Supp. 58–4612. Thus, any procedural challenge to the action of an association must be done within 60 days. As Frobish takes issue with the substance of Cedar Lake's rule rather than the procedure employed by Cedar Lakes to enact the rule, K.S.A.2014 Supp. 58–4612(j) does not bar Frobish's suit.
The judgment of the district court is reversed, and the case is remanded with instructions to allow Frobish to inspect and copy the relevant records showing the names and addresses of unit owners delinquent in their dues payments.