Opinion
C.A. WC-2015-0463
05-01-2018
W.H.I., INC., Plaintiff, Defendant in Counterclaim, v. JAMES COURTER; SORGENFREI, LLC, Defendants, Plaintiffs in Counterclaim, and Third Party Plaintiffs, and JVLV REALTY, INC.; HOWARD L. HARONIAN, M.D.; HJM LLC; JAMES & LYNN VALLIDES; and SALLY MERRY, Involuntary Plaintiffs in Counterclaim, and JVLV REALTY, INC.; HOWARD L. HARONIAN, M.D.; HJM LLC; JAMES & LYNN VALLIDES; and SALLY MERRY, Involuntary Third Party Plaintiffs and MERRILL LYNCH CREDIT CORPORATION; DIME BANK; Parties-In-Interest, v. PETER V. CATALANO; WATCH HILL INN HOTEL CONDOMINIUM ASSOCIATION (a.k.a. WATCH HILL INN CONDOMINIUM ASSOCIATION); WATCH HILL PROPERTIES, LLC; and WHI PARKING, LLC. Third Party Defendants.
For Plaintiff: John O. Mancini, Esq. For Defendant: Jeffrey H. Gladstone, Esq.; Cale P. Keable, Esq.; John Deacon, Esq.; Americo M. Scungio, Esq.; Catherine V. Eastwood, Esq.; Erich J. Hasselbacher, Esq.
For Plaintiff: John O. Mancini, Esq.
For Defendant: Jeffrey H. Gladstone, Esq.; Cale P. Keable, Esq.; John Deacon, Esq.; Americo M. Scungio, Esq.; Catherine V. Eastwood, Esq.; Erich J. Hasselbacher, Esq.
DECISION
STERN, J.
Defendants/Plaintiffs in Counterclaim/Third Party Plaintiffs James Courter (Courter) and Sorgenfrei, LLC (Sorgenfrei), together with Involuntary Plaintiffs in Counterclaim/Involuntary Third Party Plaintiffs JVLV Realty, Inc. (JVLV), Howard L. Haronian, M.D. (Dr. Haronian), James and Lynn Vallides (the Vallideses), and Sally Merry (Merry) (collectively, the Unit Owners), move for partial summary judgment against Plaintiff/Counterclaim-Defendant W.H.I., Inc. (WHI or Declarant), Third Party Defendant Peter V. Catalano (Catalano), and Third Party Defendant WHI Parking, LLC (WHI Parking), a wholly owned subsidiary of WHI (collectively, Plaintiffs). Specifically, the Unit Owners claim that there are no genuine issues of material fact with respect to parking-related issues raised in their memorandum. In response, Plaintiffs object to the Unit Owners' motion and also move for summary judgment, seeking a declaration that the Parking Management Agreement (the PMA) and the Cross Easement are valid and binding, and that all claims asserted against Catalano in his individual capacity be dismissed. Jurisdiction is pursuant to Super. R. Civ. P. 56(c) and G.L. 1956 §§ 9-30-1 et seq.
I
Facts and Travel
The underlying facts of this case have been set forth in this Court's July 24, 2017 Decision. See W.H.I., Inc. v. Courter, No. WC-2015-0463, 2017 WL 3209052 (R.I. Super. July 24, 2017). Relevant to this Decision are the facts surrounding the parking and easement-related issues in the present motion.
On December 23, 1985, WHI formally purchased the property in dispute, located at 38 Bay Street in Westerly, Rhode Island, and created the Watch Hill Inn Condominium (WHIC). Catalano Aff. ¶ 4, Oct. 26, 2017. WHI is the declarant of that certain Declaration of Condominium recorded in the Land Evidence Records of the Town of Westerly on February 17, 2006 in Book 1504, at Page 176 (the Declaration), the same which was amended on July 7, 2006 and recorded in the Land Evidence Records in Book 1550, at Page 187 (the First Amended Declaration). Id. at ¶ 2. WHI currently owns-and has owned since the Declaration's inception-five units at WHIC: W201, W202, W203, W402, and W501. Id. at ¶ 3. The Watch Hill Inn Condominium Association (WHICA) is a condominium association that was created by the Declaration and governs the units located at WHIC. Id. at ¶ 4.
From 1986 to 2005, Watch Hill Inn was renovated and upgraded to include sixteen efficiency hotel units, one residential apartment, a banquet facility for 200 persons, and an indoor/outdoor restaurant for 180 patrons. Id. at ¶ 5. After the Watch Hill Inn was cited for sixty-five violations under the Rhode Island Fire Codes, it was forced to shut down to conform to the new regulations. Catalano Aff. ¶ 9, June 1, 2017. WHI appealed to the State of Rhode Island Rehab Board and was eventually approved for a continued, nonconforming "mixed-use status." Id. at ¶ 10. RGB Architects (RGB) then prepared the condominium plans and specifications, which were subsequently filed with the Town of Westerly Building and Zoning Departments, the Department of Environmental Management (DEM), Historic Landmark Preservations, and Coastal Resources. Catalano Aff. ¶ 6, Oct. 26, 2017. Due to these new regulations, WHI was approved for eleven units consisting of ten residential dwelling units and one restaurant. Id.
The Town of Westerly adopted Article XI, § 260-77-a parking regulation zoning ordinance-on October 16, 1998 in Chapter Number 1242, and readopted on May 12, 2003 in Chapter Number 1439 (the Zoning Ordinance). Specifically, the Zoning Ordinance states:
"A. Parking required. Any structure or use, erected or developed after the date of passage of this chapter, must provide off-street parking facilities . . . in accordance with the following regulations:
"(1) Residential dwelling: two car spaces for each dwelling unit.
"(2) Hotels/motels and inns: one space per room plus one for every three employees on the largest shift, plus one space per four seats capacity of all meeting/assembly rooms and associated restaurants.
. . . .
"B. Plans and specifications for parking facilities. Plans and specifications for the required parking facility and its access drives shall be submitted at the time of application for a permit for the main use. In allocating area for off-street parking facilities, each parking space shall have a minimum width of nine feet, a minimum length of 18 feet and shall be served by suitable aisles to permit access into all parking spaces. In no case shall the gross area per parking space be less than 270 square feet. Such plans and specifications shall include planted islands and buffers as well as a lighting plan." Unit Owners' Mem. in Supp. of Mot. for Partial Summ. J. (Unit Owners' Mot.), Ex. F.
On March 15, 2005, RGB prepared a site plan for Declarant with respect to the WHIC property (the RGB Parking Plan). The RGB Parking Plan identified twenty-three total spaces on the WHIC property, which were two handicapped spaces, three non-valet spaces, and eighteen valet spaces. Unit Owners' Mot., Ex. G. The RGB Parking Plan further regulated the non-handicapped parking spaces as follows: ten parking spaces were assigned to ten hotel units (one parking space per one hotel unit), eight parking spaces were designated for patrons at the restaurant (one parking space per four seats in a thirty-seat restaurant), and three parking spaces were designated for the restaurant's employees (one parking space per three employees in a nine-employee restaurant). Id. Essentially, the RGB Parking Plan complied with § 260-77(A)(2) of the Zoning Ordinance, thus recognizing the WHIC property at the time as a hotel, motel, or inn. See Unit Owners' Mot., Ex. F. The RGB Parking Plan predated the formation of the WHICA by several months. See Unit Owners' Mot., Ex. G; Pls.' Mem. in Obj. to Partial Summ. J. and in Supp. of Mot. for Summ. J. (WHI's Mot.), Ex. 1.
Additionally, WHI submitted a separate site plan for approval by the Town of Westerly dated October 12, 2005 relating to the WHIC property; this plan was approved by the Westerly Zoning Officer on November 4, 2005. This plan contained a parking plan which identified sixteen parking spaces on the WHIC property (the Town-Approved Parking Plan). Unit Owners' Mot., Ex. H. According to Declarant, these sixteen on-site compact "stacked" parking spaces were used primarily for the restaurant staff and also contained three required handicap spaces. Catalano Aff. ¶ 5, Oct. 26, 2017. The Town-Approved Parking Plan was in effect until July 21, 2006, when a subsequent plan was required with the First Amended Declaration. Id. at 7. According to the Unit Owners, however, a subsequent plan for parking was never filed.
Then, on January 15, 2006, WHI, along with the Operator, WHI Parking, negotiated with BSI, Inc. (BSI)-a corporation that owned an adjacent property to the WHIC property to which the Bayside Inn Motel Condominium Association (BSA) was located-to share parking spaces. Id. at ¶ 8. Their agreement was memorialized into the PMA. WHI's Mot., Ex. 1. Catalano, the Vice President of WHI, is also the President of BSI; WHI Parking is a wholly owned subsidiary company of WHI. Catalano Aff. ¶ 1, Oct. 26, 2017; WHI's Mot., Ex. 1. As stated in the PMA, the purpose of entering into such a transaction was for WHI Parking to "operate and manage the parking for the [WHI and BSI] Properties." WHI's Mot., Ex. 1, at 1. Furthermore, even though the PMA was entered into before both the WHICA and BSA had been created, the PMA nonetheless bound the Associations. As articulated therein,
"Whereas, the parking lot areas will be Common Elements of the Associations and while the land is owned by the Association, the parking operation will be managed by the Operator under this 'Parking Management Agreement', (the 'Agreement'), and
. . . .
"Whereas, WHI and BSI intend to file their respective condominium documents with the State of Rhode Island and subsequently record the documents with the Town of Westerly, at which time WHI and BSI will transfer their property rights and ownership to their respective Association. Consequently, the Associations will replace WHI and BSI, and this Agreement will become binding between the Associations and the Operator at the time of the recordings . . . . All the obligations of the Parties contained herein will be preserved." Id. at 2.
The PMA is a lease with an initial term of forty-nine years with unlimited five-year options. With respect to the parking management services, the PMA stated in part:
"a. Management Services - In exchange for the Agreement, Operator will provide management services to operate the Properties parking lots, both assigned and non-assigned parking spaces, control the flow of traffic and maintain the fire lanes, direct delivery, screen unauthorized vehicles, and coordinate the reasonable parking needs of occupants, guests, deliveries, employees and renters during the periods of operation on an [sic] year round basis.
"b. Parking Spaces - The Parties agree Operator will take possession of all parking spaces . . . Operator may rent for profit the balance of the parking spaces (both assigned and non-assigned) to the general public, restaurant patrons, and guest of the dwelling spaces, at a parking rate determined solely by the Operator. The Parties further agree all revenue derived from the Parking income is for the benefit of the Operator.
. . . .
"c. Compliance - The Parties agree Operator will operate the parking lot at its sole discretion including location and relocation of parking space assignments, provided such operation is in accordance with the Town of Westerly Zoning Ordinance.
"i. Operator agrees it will conform to the By-Laws of the Association(s) at the time of Filing(s), and WHI and BSI agree that any modifications to the Association(s) By-Laws will not interfere with Operator's rights under this Agreement.
"ii. This Agreement shall be automatically binding upon the Association(s) at the time of Filing.
. . . .
"f. Parking Rates - Operator agrees to post or make available at the Reception Office, its daily, weekly, monthly and or seasonal rates, which are subject to change at the sole discretion of the Operator." Id. at 2-3.
Additionally, the PMA provided the following provision on base rent to be allocated for both properties:
"a. In exchange for the Agreement and use of the BSI parking lot and facilities, Operator agrees to pay BSI a nominal annual rent equal to one thousand ($1, 000.00) dollars per year payable on August 1st of each and every year of the Lease Term. Such annual rent is referred to as (the 'Base Rent').
"b. In exchange for the Agreement and the use of the WHI parking lot and ramp, Operator will provide Management Services as consideration, but will not pay Base Rent to WHI as the WHI Property has a pre-existing non-conforming use of its off-street parking; and most of its parking including ingress and egress will be on BSI Property. Therefore, Operator will generate very little revenue from the WHI limited parking spaces. The WHI Association when created will not receive Base Rent.
"c. In exchange for the Agreement and the right to use the lot and facilities of the Watch Hill Inn owned by WHI, Operator agrees to pay WHI an Annual Rent equal to One Thousand ($1, 000.00) Dollars payable on August 1st of each and every year of the Agreement Term as Base Rent. This Base Rent and any Additional Rent will not be transferred to the WHI Association at any time." Id. at 4.
The PMA also stated that the base rent would be increased every five years by one hundred dollars as "Additional Rent, " and that this additional rent added to the base rent will become the "Adjusted Base Rent." Id. Furthermore, during the first lease renewal option period, the Adjusted Base Rent would double the Adjusted Base Rent in the forty-ninth year, and that subsequent renewals would increase by two hundred dollars per every five-year increment. Id.
Lastly, under section six of the PMA, titled "Representations, " the parties agreed to the following:
"a. The Parties represent and acknowledge the following:
"i. Parking Spaces - The Parties acknowledge the Parking Plans . . . indicate where the assigned and non-assigned parking spaces for the Properties are located. Such locations are subject to change by the Operator but must be in conformance with Westerly Zoning Codes.
. . . .
"iii. Easements - The Parties acknowledge there are Recorded Easements, Court Orders, and Right of Ways for the benefit of the Parties and others." Id. at 4-5.
Approximately one month later, on February 17, 2006, the WHICA was created and its Declaration was recorded, naming WHI as its Declarant. WHI Mot., Ex. 2. On the same day, a Cross Easement and Right of Way Agreement (the Cross Easement) between WHI and BSI was recorded in the Land Evidence Records of the Town of Westerly in Book 1504, at page 168. Catalano Aff. ¶ 11, Oct. 26, 2017; see also WHI's Mot., Ex. 3. The Cross Easement granted BSI ingress and egress "by all manner of vehicles and by foot the portion of the common driveway which is located on the WHI land, " as well as a "designated handicapped parking area which is located on the WHI land." WHI's Mot., Ex. 3. In return, the Cross Easement granted WHI ingress and egress "by all manner of vehicles and by foot the portion of the common driveway which is located on the BSI land, " as well as a "[d]rainage easement which is located on the BSI land." Id. Furthermore, the Cross Easement also stated the following: "WHI and BSI hereby agree that neither party will park vehicles in or otherwise obstruct in any way the common driveway nor will they use or permit to be used said driveway in any way which will hinder the other party's use of said driveway." Id. Attached to the Cross Easement was a parking plan, labeled "Exhibit A, " that identified sixteen parking spaces on the WHIC property (the Cross Easement Parking Plan). Id.
The Cross Easement was acknowledged in the Public Offering Statement and the Declaration. See Unit Owner's Mot., Ex. E, § 5 ("There are also vehicular and pedestrian easements with the adjoining property, located at 42-44 Bay Street, Westerly, Rhode Island, for ingress and egress in addition to a handicap parking space requirement for the benefit of the [sic] 42-44 Bay Street."); WHI's Mot., Ex. 2, Ex. 4 thereto ("Subject to easement for pedestrian and vehicle ingress and egress benefiting BSI, Inc. Subject to parking easement benefiting BSI, Inc."). When the Declaration was amended on July 7, 2006, exhibit four was updated to include the following language: "Subject to a Cross Easement and Right of Way Agreement recorded in the Westerly Land Evidence Records on February 17, 2006 at 10:21 a.m. in Book 1504 at Page 168." Catalano Aff., Ex. B, Oct. 26, 2017.
Furthermore, the Public Offering Statement provided to all Unit Owners prior to their acquisitions stated the following:
"One assigned parking space is allotted to each Unit with one bedroom. Each Unit that contains two bedrooms shall have one assigned parking space and the use of one valet parking space. The Commercial Unit will have sufficient parking spaces for its employees and guests in accordance with the Westerly Zoning Code. Two (2) assigned handicap parking spaces are assigned to the Units 203 and 204, which are the handicapped accessible Residential Unit and the Restaurant Unit, respectively." Unit Owner's Mot., Ex. E, § 3.
The Public Offering Statement did state, however, that "Limited Common Elements include exterior stairs, stairways, parking spaces and storage spaces, if any, for each Unit." Id. (emphasis added). The description of parking was further delineated in § 7.1(e) of the Declaration as amended on July 7, 2006 (First Amended Declaration):
The Declaration was amended several times: the First Amended Declaration was recorded in the Town of Westerly Land Records on July 7, 2006 at Book 1550, page 187. WHI Mot. for Summ. J. (June 2, 2017), Ex. 7. The First Amended Declaration itself was subsequently amended four times. The First Amendment to the First Amended Declaration occurred on July 21, 2006. Id. at Ex. 9. The Second Amendment to the First Amended Declaration was recorded on October 17, 2006. Id. at Ex. 12. The Third Amendment to the First Amended Declaration was recorded on August 30, 2007. Id. at Ex. 21. As this Court noted in its July 24, 2017 Decision, this amendment "made a 'nominal' change by replacing the word 'Hotel' with 'Residential' 'for marketing and financing purposes and did not change the nature or use of the units[.]'" W.H.I., Inc., 2017 WL 3209052, at *2 n.3 (citing Marc B. Gertsacov, Esq. Aff. ¶ 7; WHI Mot. for Summ. J. (June 2, 2017), Ex. 21). Lastly, the Fourth Amendment to the First Amended Declaration was recorded in December 2007. WHI Mot. for Summ. J., Ex. 25. Additionally, the Declaration was further amended three more times over the next eight years (Second Amended Declaration, Third Amended Declaration, and Fourth Amended Declaration); however, this Court ruled, in its July 24, 2017 Decision that the Second Amended Declaration, Third Amended Declaration, and Fourth Amended Declaration were void ab initio in their entirety. See W.H.I., Inc., 2017 WL 3209052, at *9-16. Therefore, the valid documents this Court may consider in this Decision are the Declaration, the First Amended Declaration, and the four amendments to the First Amended Declaration.
"There are eleven (11) designated parking spaces including 2 handicap parking spaces (one for the Handicapped Accessible Unit, W203, and one for the Restaurant Unit, W204), ten (10) 'valet parking spaces' and sufficient parking spaces for the Restaurant Unit (employees and patrons), intended to be used for the parking of private registered passenger cars of occupants/guests of Units as delineated in the survey plan attached hereto. The Executive Board reserves the right to change the location of the designated parking spaces and allow the valet service and/or Management Company to use unoccupied parking spaces in the Unit Owner's absence and non-use. Campers, trucks, recreational vehicles, trailers, larger SUV's or vans are not permitted upon the premises and shall be removed at the Owner's expense." WHI's Mot. for Summ. J. (June 2, 2017), Ex. 7.
Furthermore, the Declaration also referred to the survey plans prepared by RGB. See WHI's Mot., Ex. 2, Ex. 3 thereto ("That set of plans filed in the Westerly Land Evidence Records contemporaneously herewith entitled, 'WATCH HILL INN, 38 BAY STREET, WATCH HILL, RHODE ISLAND 02891, HOTEL CONDOMINIUM PROJECT ISSUED ON FEBRUARY 10, 2006.'"). These plans delineated the parking area which was common area and also those areas of WHICA, which were limited common elements. Catalano Aff. ¶ 48, Oct. 26, 2017.
On July 21, 2006, WHI filed an Amended Site Survey for the Watch Hill Inn property, which was recorded in Book 2006 at Page 23 in the Town of Westerly Land Evidence Records (the Amended Site Survey). WHI's Mot., Ex. C. The Amended Site Survey delineated the common elements of the property as "CE, " and the limited common elements as "LCE." Catalano Aff. ¶ 19, Oct. 26, 2017. The Amended Site Survey also contained an easement note, which stated that the site was subject to the Cross Easement, delineated the parking easement in favor of BSI for a handicap parking space, and identified limited common elements to Unit 204 and Unit 203. See WHI's Mot., Ex. C. It also did not delineate any parking spaces as limited common elements for the Unit Owners. Catalano Aff. ¶ 20, Oct. 26, 2017. This Site Survey, as well as the First Amended Declaration, was provided to Carmen Courter, Katrina Courter, and Donica Dohrenwend when they purchased Unit W301. Id. at ¶ 21.
WHICA's business affairs and protocols are governed by the Executive Board. Id. at ¶ 41. The first WHICA meeting was held on December 26, 2006, a budget meeting as well as the first annual meeting was held on July 14, 2007, where the first Executive Board was formed, and annual meetings occurred thereafter. Id. The Executive Board has always maintained a three-member composition, ranging from members such as Ray Willis, Catalano, Dr. Haronian, Howard Menaker, Dana V. Catalano, Mark Szaro, and James Vallides. Id. at ¶ 42.
Catalano served as President of the Executive Board from 2006 to 2016, and currently serves as a WHICA Board Advisor Representative for the majority Unit Owners. Id. at ¶ 43. He alleges he never acted in an individual capacity nor ever held himself out to be anything other than an agent of Declarant and President of the Executive Board. Id. at ¶ 44. In addition, Catalano alleges that Declarant has never acted unilaterally with respect to implementing any of the amendments to the Declaration or any actions of WHICA; rather, he claims, Declarant has acted in conjunction with legal advice and after a vote of the Executive Board at a duly noticed meeting. Id. at ¶ 45.
Declarant sold the first unit of the WHICA to Carmen Courter, Katrina Courter, and Donica Dohrenwend (the Courter Parties) on July 17, 2006, and the second unit was sold to Merry on August 11, 2006. See WHI Mot. for Summ. J. (June 2, 2017), Exs. 8, 11. On November 22, 2006, the third unit was sold to William and Carol Reudgen (the Reudgens), and, on February 16, 2007, the fourth unit was sold to the Vallideses. See id. at Exs. 13, 16. On August 15, 2007, Dr. Haronian entered into an option to purchase one unit from WHI. See id. at Ex. 20. Subsequently, Declarant sold the fifth unit to Watch Hill Design, LLC on July 25, 2008; at the time, Dr. Haronian was Watch Hill Design, LLC's only member. See id. at Exs. 31-32. Dr. Haronian eventually purchased that same unit from Watch Hill Design, LLC on December 16, 2009. See id. at Ex. 49. In addition, the unit owned by the Reudgens was foreclosed on by the mortgagee on or about April 5, 2010. See id. at Ex. 50. On June 14, 2011, JVLV, an entity owned in part by the Vallideses, purchased from the bank the foreclosed unit formerly owned by the Reudgens. See id. at Ex. 72. Then, on or about September 7, 2012, Sorgenfrei purchased the Courter Parties' Unit W301. See id. at Ex. 87. During that same month, on September 28, 2012, HJM, LLC purchased the sixth unit-the former restaurant unit-from Declarant. See id. at Ex. 89. The first parking re-arrangements occurred when the restaurant was converted to a two-bedroom residential unit. Catalano Aff. ¶ 49, Oct. 26, 2017. Two parking spaces were assigned to this unit as a result of the conversion, and two spaces were assigned to Unit W401, owned by Merry; the balance assigned, according to Declarant, remained with WHI. Id.
The Unit Owners bring this action before this Court to "vindicate [their] rights with respect to their parking spaces" on the WHIC property and to terminate Declarant's usurpation of parking spaces for Declarant's own gain. Additionally, the Unit Owners seek this Court to prohibit any further interference with their easement right to freely pass and repass over the Cross Easement.
In filing the pending motion for partial summary judgment, the Unit Owners request the following declaratory relief: (1) the two parking spaces allocated to each Unit Owner constitute limited common elements under the Public Offering Statement, the First Amended Declaration, the Rhode Island Condominium Act (the Act), and/or Rhode Island law; (2) the Unit Owners are entitled to terminate, without penalty, WHICA's participation in the PMA; (3) Declarant has interfered with the Cross Easement by placing gates, planters and other obstructions within the defined Cross Easement; (4) Declarant violated the terms of the Public Offering Statement and the First Amended Declaration by eliminating parking spaces on the WHIC property that existed as of the date of the First Amended Declaration, thereby failing to provide two parking spaces allotted to each Unit Owner on the WHIC property; (5) WHIC's property may not be used by anyone for commercial parking purposes without the permission of the WHICA, and then only with the issuance of a commercial parking certificate by the Town of Westerly as required by ordinance; (6) a commercial parking certificate issued by the Town of Westerly for the Bayside property (2016 Commercial Parking Certificate) does not permit WHI Parking to use the parking spaces on the WHIC property for commercial parking activities; (7) Declarant's interference with and/or elimination of the Unit Owners' parking spaces by reducing the number of usable parking spaces on the WHIC property constitutes a violation of G.L. 1956 § 34-36.1-2.08(a) of the Act; (8) pursuant to § 34-36.1-3.14 of the Act, the Unit Owners are due an accounting and their pro rata share of the surplus funds acquired by WHI Parking and/or Declarant through the commercial use of the Unit Owners' parking spaces; (9) the PMA must be terminated pursuant to § 34-36.1-3.05 of the Act based upon the sworn statement of each of the Unit Owners; (10) the PMA is void and must be set aside for failure of consideration; and (11) the September 11, 2015 invoice for parking charges directed to Courter is void and/or unenforceable. Plaintiffs have timely objected to these requests for declaration and, in the interim, also request a declaration that the PMA and Cross Easement are valid and binding. Additionally, Plaintiffs assert that Catalano, in his individual capacity, should be dismissed from this case as a third-party defendant.
II
Standard of Review
"'Summary judgment is an extreme remedy and should be granted only when 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as [a] matter of law.'" Rose v. Brusini, 149 A.3d 135, 139 (R.I. 2016) (quoting Plunkett v. State, 869 A.2d 1185, 1187 (R.I. 2005)). "'Only when a review of the admissible evidence viewed in the light most favorable to the nonmoving party reveals no genuine issues of material fact, and the moving party is entitled to judgment as a matter of law, will this Court . . . grant . . . summary judgment.'" Id. at 139-40 (quoting Nat'l Refrigeration, Inc. v. Standen Contracting Co., 942 A.2d 968, 971 (R.I. 2008)). "The party opposing 'a motion for summary judgment carries the burden of proving by competent evidence the existence of a disputed material issue of fact and cannot rest on allegations or denials in the pleadings or on conclusions or legal opinions.'" Id. at 140 (quoting Nat'l Refrigeration, Inc., 942 A.2d at 971).
Under the Uniform Declaratory Judgments Act (UDJA), this Court possesses the "power to declare rights, status, and other legal relations whether or not further relief is or could be claimed." Sec. 9-30-1. A decision to grant or deny relief, however, is purely discretionary under the UDJA. Sullivan v. Chafee, 703 A.2d 748, 751 (R.I. 1997). The stated purpose of the UDJA is "to settle and to afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations . . . ." Sec. 9-30-12; see also Millett v. Hoisting Eng'rs' Licensing Div. of Dep't of Labor, 119 R.I. 285, 291, 377 A.2d 229, 233 (1977) ("The purpose of declaratory judgment actions is to render disputes concerning the legal rights and duties of parties justiciable without proof of a wrong committed by one party against another, and thus facilitate the termination of controversies."). Factors to be considered when determining whether declaratory judgment relief is appropriate include the following:
"the existence of another remedy, the availability of other relief, the fact that a question may readily be presented in an actual trial, and the fact that there is pending, at the time of the commencement of the declaratory action, another action or proceeding which involves the same parties and in which may be adjudicated the same identical issues that are involved in the declaratory action." Berberian v. Travisono, 114 R.I. 269, 273, 332 A.2d 121, 123-24 (1975).
III
Analysis
A
Whether the Unit Owners Have the Right to Park on the Bayside Property
The Unit Owners assert that there is no legal obligation, under the Cross Easement, requiring the BSA unit owners to grant the WHICA non-declarant unit owners an enforceable and transferable right to use the Bayside property in perpetuity for their parking spaces. Instead, the Unit Owners claim that their sole avenue of relief is to enforce their rights to two parking spaces pursuant to the Public Offering Statement, First Amended Declaration, and/or the Town-Approved Parking Plan. Catalano, either individually or through a related entity, controls Bayside because he or an affiliated entity owns a majority of the Bayside units; this includes BSI, Inc., to which Catalano is President. Therefore, the Unit Owners contend that Catalano has the enforceable or transferable right to use the Bayside property for parking to satisfy the parking requirements for each of the five units that Declarant, either individually or through a related entity, owns in the WHICA. Because of these interferences by Declarant, the Unit Owners contend that their units are unmarketable and its value has been materially impacted.
According to the Unit Owners, the First Amended Declaration was the only document available to them at the time they purchased their respective units that identified the location of the two parking spaces that were part of the sale of each unit at WHIC. The Unit Owners also contend that neither the Public Offering Statement nor the First Amended Declaration made any mention of the Bayside property as having any connection to the sale of the Unit Owners' respective units with regard to parking. Therefore, the Unit Owners argue that they purchased their respective units based on the understanding that they were also purchasing a recognizable and transferable property interest in two parking spaces on the WHIC property. See James Vallides Aff. (Vallides Aff.), JVLV, LLC Aff. (JVLV Aff.), Sorgenfrei LLC Aff. (Sorgenfrei Aff.), Sally Merry Aff. (Merry Aff.), and Howard Haronian, M.D. Aff. (Haronian Aff.) (collectively, Unit Owners' Affs.) ¶¶ 5, 8. Had Declarant stated that the units were not being sold with legal, transferable interests in two parking spaces, the Unit Owners maintain they would not have purchased their units. Id.
In response, according to Plaintiffs, the constraints on the WHIC property with respect to parking are an undisputed fact known to all the Unit Owners prior to their acquisition of the respective condominium units. Consequently, a portion of the parking spaces used by the Unit Owners is located on the WHIC property, while another portion of the parking spaces is on the Bayside property. Plaintiffs further argue that the Cross Easement was recorded as a perpetual easement in the Town of Westerly Land Evidence Records, and the condominium documents that the Unit Owners received were subject to the Cross Easement. See Catalano Aff. ¶ 12, Oct. 26, 2017.
Based on the interpretation of the Cross Easement, this Court finds in favor of the Unit Owners and declares that the Cross Easement does not grant the Unit Owners or anyone affiliated with the Unit Owners the right to park on the Bayside property. This Court first acknowledges that the Unit Owners are not contesting the Cross Easement's validity; therefore, the Cross Easement is valid and binding on the WHIC and Bayside properties. This Court thus turns to the scope of rights provided for in the Cross Easement. "In Rhode Island, 'to create an easement by express grant, there must be a writing containing plain and direct language evincing the grantor's intent to create a right in the nature of an easement rather than a license.'" Plainfield Pike Dev., LLC v. Victor Anthony Props., Inc., 160 A.3d 995, 1002 (R.I. 2017) (citing Kinder v. Westcott, 107 A.3d 321, 325 (R.I. 2015)). "'Although a plaintiff in a civil action is ordinarily required to prove his or her case by only a preponderance of the evidence, a plaintiff seeking to prove an easement must instead overcome a higher clear and convincing standard[.]'" Kinder, 107 A.3d at 325 (quoting Pelletier v. Laureanno, 46 A.3d 28, 35 (R.I. 2012)) (internal quotation marks omitted). "When interpreting an instrument that purportedly creates an easement, this Court must effectuate the intent of the parties." Id. (citing Carpenter v. Hanslin, 900 A.2d 1136, 1147 (R.I. 2006)). When construing its provisions, this Court examines the entire instrument. Id. (citing Bradish v. Sullivan, 54 R.I. 434, 440, 173 A. 117, 119 (1934)). Furthermore,
"[the Rhode Island Supreme Court] has 'long adhered to the following basic principle: [W]here in a written instrument an easement of way is granted in express terms, the nature and extent of the easement thus established is to be determined primarily from the language used in the writing, and if the terms thereof are free from uncertainty and ambiguity, oral testimony is not admissible to explain the nature or extent of the easement grant.'" Hamilton v. Ballard, 161 A.3d 470, 480 (R.I. 2017) (quoting Grady v. Narragansett Elec. Co., 962 A.2d 34, 45 (R.I. 2009)) (internal quotation marks omitted).
"Moreover, '[i]n construing the reservation . . . [this Court] seek[s] only that intention expressed in the instrument and not some undisclosed intention that the parties may have had in mind.'" Id. (quoting Thomas v. Ross, 119 R.I. 231, 240, 376 A.2d 1368, 1373 (1977)).
This Court determines that the language in the Cross Easement is clear and unambiguous and thus can only be subject to one reasonable interpretation. Hamilton, 161 A.3d at 480. Nowhere in the recital section of the Cross Easement does it state that the BSA grants the Unit Owners on the WHIC property the right to park on the Bayside property. Instead, this section recites the Cross Easement's purpose, which is that "[t]he parties hereto wish to grant cross easements in the common driveway between their properties to provide easier access and egress to and from their respective properties." WHI Mot., Ex. 3. The Cross Easement continues further:
"WHI hereby grants to BSI as appurtenant to the BSI land the following perpetual easement which shall constitute a burden upon the WHI land:
"to use for ingress and egress to the BSI land by all manner of vehicles and by foot the portion of the common driveway which is located on the WHI land and which is more particularly described in Exhibit A attached hereto "BSI does hereby grant to WHI as appurtenant to the WHI land, the following perpetual easement which shall constitute a burden upon the BSI land:
"[T]o use for ingress and egress to the WHI land by all manner of vehicles and by foot the portion of the common driveway which is located on the BSI land and which is more particularly described in Exhibit B attached hereto
"WHI does hereby grant to BSI as appurtenant to the WHI land, the following perpetual easement which shall constitute a burden upon the WHI land
"A designated handicapped parking area which is located on the WHI land and which is more particularly described in Exhibit A attached hereto
"BSI does hereby grant to WHI as appurtenant to the BSI land, the following perpetual easement which shall constitute a burden upon the BSI land
"Drainage easement which is located on the BSI land and which is more particularly described in Exhibit B attached hereto
"In the event that the WHI land and the BSI land shall be owned by the same person, persons or corporation, there shall be no merger or extinguishment of the easements granted in Paragraphs 1 and 2 above until such time as such owner and all persons and/or parties holding a mortgage on the premises, or any part hereof, shall record an instrument in the Westerly Land Evidence Records to that effect.
"WHI and BSI hereby agree that neither party will park vehicles in or otherwise obstruct in any way the common driveway nor will they use or permit to be used said driveway in any way which will hinder the other party's use of said driveway."
"The conveyance, grants, covenants, agreements, and reservations contained herein shall be binding upon and the benefits and advantages thereof shall inure to the heirs, executors, administrators, successors and assigns of WHI and of BSI." Id.
Furthermore, although Plaintiffs contend that the Unit Owners can park on the Bayside property because of the Cross Easement, the Unit Owners' rights to park there could immediately cease if Declarant were to sell its interest in Bayside and the subsequent owner refuses to let the Unit Owners park there. Specifically, the only references to parking in the Cross Easement is in Exhibit A, which identifies a parking easement in favor of BSI on the WHIC property with respect to the handicap parking space on the WHIC property; and Exhibit B, which contains a notation relating to four spaces located on the Bayside property stating, "Parking Easement in Favor of Janice DeCourcy Sweet." Id.; see Hamilton, 161 A.3d at 480. According to the Unit Owners, Ms. DeCourcy Sweet never owned a unit at WHIC. No other rights other than the rights mentioned above were granted under the Cross Easement. See WHI Mot., Ex. 3. Moreover, Declarant even admitted in its answer to the Fourth Amended Counterclaim that no recorded easement exists providing the Unit Owners with any parking rights on the Bayside property, abutting the WHIC property. See WHI's Answer to Fourth Am. Countercl. ¶ 47.
It is clear to this Court then that because no parking spaces were expressly granted to the WHICA Unit Owners under the Cross Easement, they did not have the legal right to park there. See Richards v. Halder, 853 A.2d 1206, 1210 (R.I. 2004) (right-of-way was only limited to foot traffic where deed's reference to the easement did not provide additional information on parking vehicles in driveway, and there was sufficient evidence indicating that there was not enough room for vehicles to park in driveway). As argued by the Unit Owners, it would be problematic for this Court to find otherwise because even if there were an oral agreement between the Unit Owners and Declarant that the Unit Owners can park on the Bayside property if they so wish, they still do not have an express legal right to park there. If under these circumstances Declarant-which owns a majority of the Bayside property-were to sell that property to a subsequent purchaser, and that purchaser does not wish to exercise the oral promise to the Unit Owners, then the Unit Owners would not be able to park on the Bayside property and therefore would have no place to park their vehicles. Therefore, at the time that they purchased their respective units, even if the condominium documents did refer to the Cross Easement, it does not give the Unit Owners the expectation that they had to park-let alone a right to park-on the Bayside property. See Hamilton, 161 A.3d at 480.
This Court recognizes that Plaintiffs have only argued rights granted under the express Cross Easement, and have not raised any arguments with respect to an easement by necessity or easement by implication. For this reason, this Court will not conduct an analysis under such issues and will only focus on the express grant under the Cross Easement.
B
The Number of Parking Spaces Assigned to Each Unit Owner on the WHIC Property
Having determined that the Unit Owners had the expectation to park on the WHIC property, this Court now determines how many parking spaces each Unit Owner receives on the WHIC property. The Unit Owners assert that the Zoning Ordinance and the First Amended Declaration require twenty-one spaces on the WHIC property. The WHIC was developed after the Town of Westerly Zoning Ordinance was adopted on October 16, 1998 and readopted on May 12, 2003. Specifically, the Unit Owners contend that the Town of Westerly parking regulations in effect at the time of the recording of the First Amended Declaration required a minimum of twenty-one parking spaces for the WHIC, and that according to the Unit Owners, each of those spaces had to be on the WHIC property. The Unit Owners further argue that § 7.1(e) of the First Amended Declaration was consistent with the RGB Parking Plan and also established, at a minimum, twenty-one parking spaces on the WHIC property. See WHI's Mot. for Summ. J. (June 2, 2017), Ex. 7. Additionally, the Unit Owners argue that Declarant deceptively prepared the Town-Approved Parking Plan for the WHIC property-inconsistent with the Town of Westerly's off-street parking regulations and the First Amended Declaration, since it only identified sixteen spaces on the WHIC property-and furthered its for-profit parking operations. In further support of this claim, the Unit Owners argue that the Cross Easement Parking Plan and the Town-Approved Parking Plan predate the sale of the first unit at WHIC, yet Declarant never updated the Public Offering Statement or the First Amended Declaration to notify all of the unit owners of the sixteen parking space plans.
Of the eleven units on the WHIC property, Declarant owns five units; the Unit Owners, along with HJM, LLC, constitute all of the unit owners at WHIC. According to the Unit Owners, then, both the Cross Easement Parking Plan and the Town-Approved Parking Plan could provide two spaces to each of the non-declarant unit owners as well as a handicap space to satisfy the requirement in the Cross Easement. Moreover, the Unit Owners assert that the non-declarant unit owners only need a total of twelve parking spaces on the WHIC property to satisfy the Town of Westerly's Off-Street Parking Regulations and Declarant's representations contained in the condominium documents (i.e, the Public Offering Statement and First Amended Declaration). Accordingly, the enforcement of any of the three parking plans-the Town-Approved Parking Plan, the Cross Easement Parking Plan, or the RGB Parking Plan that was described and referenced in § 7.1(e) of the First Amended Declaration-would provide sufficient parking to satisfy the rights and expectations of all of the non-declarant unit owners. Therefore, the Unit Owners contend that they are entitled to the exclusive use of a total of twelve parking spaces on the WHIC property as part of their transferable condominium interest.
The Unit Owners also argue that the current parking arrangement is in violation of the Town of Westerly's Parking Ordinances because there is not enough parking to meet the two-parking-space requirement for each unit. According to the Unit Owners, upon reviewing the Town of Westerly's records, no commercial parking application or certificate or license was filed or issued for the WHIC property from 2007 to the present. Jeffrey H. Gladstone, Esq. Aff. (Gladstone Aff.) ¶¶ 4-5. Neither did any individual or entity apply to the Town of Westerly for a certificate or license to conduct a commercial operation on the WHIC property. Id. at ¶ 6. The 2016 Commercial Parking Certificate issued by the Town of Westerly on May 3, 2016 for the Bayside property states that the number of approved parking spaces is forty spaces. However, according to the Unit Owners, the actual number of parking spaces in use for commercial purposes on the Bayside property is significantly greater than forty spaces. Unit Owners Affs. ¶ 12. Moreover, the 2016 Commercial Parking Certificate does not include any parking spaces on the WHIC property.
In response, Plaintiffs contend that the Unit Owners at the time of the acquisition of their unit knew via the Declaration that only eleven parking spaces were to be assigned, with certain spaces dedicated to handicap parking and specifically to certain units. With regard to the restaurant unit, the Declaration stated that there would be sufficient parking spaces for employees and patrons. WHI's Mot. for Summ. J. (June 2, 2017), Ex. 7. Moreover, in conjunction with the assigned spaces, the Amended Declaration called for ten valet parking spaces used by the valet service and/or management company when they were unoccupied. See id. Accordingly, Plaintiffs argue that the valet parking spaces were common elements that could be used during such times that the Unit Owner was not in residence or that the spaces were not in use. See Catalano Aff. ¶ 34, Oct. 26, 2017.
Furthermore, Plaintiffs state that the parking on the WHIC property was reassigned and reconfigured when the restaurant unit was converted to a residential unit on December 4, 2010. In furtherance of this point, Plaintiffs argue that the Unit Owners did not park on the WHIC property between 2006 and 2010, as those parking spaces were assigned to WHI and to the restaurant. See id. at ¶ 10. According to Plaintiffs, the description of the parking and its layout was demonstrated in the Town-Approved Parking Plan, in effect until July 21, 2006, when the Amended Site Survey was recorded with the First Amendment to the Amended and Restated Declaration. WHI Mot., Ex. 5. Lastly, Plaintiffs contend that the Unit Owners have no standing to enforce the Zoning Ordinance. Specifically, it claims that parking is not an issue that violates the Zoning Ordinance, and if it were the case, the Town of Westerly is capable of handling and adjudicating the matter. Plaintiffs also insist that Rhode Island case law is clear that only the town, through its solicitor, may seek enforcement of its zoning ordinances. Therefore, Plaintiffs assert that the Unit Owners have leap-frogged well-established zoning law and regulations, and have not exhausted their administrative remedies because they should have brought this issue before the Town of Westerly's zoning board first.
As with the easement law above, this Court, in construing the terms of the Public Offering Statement and the First Amended Declaration, employs contract interpretation. America Condo. Ass'n, Inc. v. Mardo, 140 A.3d 106, 113 (R.I. 2016) (quoting Sisto v. America Condo. Ass'n, Inc., 68 A.3d 603, 612 (R.I. 2013)). "'The determination of whether a contract's terms are ambiguous is a question of law . . . .'" High Steel Structures, Inc. v. Cardi Corp., 152 A.3d 429, 433-34 (R.I. 2017) (quoting JPL Livery Servs., Inc. v. R.I. Dep't of Admin., 88 A.3d 1134, 1142 (R.I. 2014)). "When there is only one reasonable interpretation of a contract, the contract is deemed unambiguous." Roadepot, LLC v. Home Depot, U.S.A., Inc., 163 A.3d 513, 519 (R.I. 2017) (citing Botelho v. City of Pawtucket Sch. Dep't, 130 A.3d 172, 176 (R.I. 2016)). "In determining whether language in a contract is ambiguous, '[the Court] give[s] words their plain, ordinary, and usual meaning.'" Botelho, 130 A.3d at 176 (quoting DiPaola v. DiPaola, 16 A.3d 571, 576 (R.I. 2011)). "However, a reviewing court should not seek out ambiguity where there is none." Roadepot, 163 A.3d at 519 (citing Botelho, 130 A.3d at 177). "The court should consider 'whether the language has only one reasonable meaning when construed . . . in an ordinary, common sense manner.'" Id. (quoting Sturbridge Home Builders, Inc. v. Downing Seaport, Inc., 890 A.2d 58, 63 (R.I. 2005)). "[I]f the contractual language is unambiguous, the intention of the parties must govern 'if that intention can be clearly inferred from the writing and . . . can be fairly carried out in a manner consistent with settled rules of law.'" A.F. Lusi Constr., Inc. v. Peerless Ins. Co., 847 A.2d 254, 258 (R.I. 2004) (quoting W.P. Assocs. v. Forcier, Inc., 637 A.2d 353, 356 (R.I. 1994)). Furthermore, "'in situations in which the language of a contractual agreement is plain and unambiguous, its meaning should be determined without reference to extrinsic facts or aids.'" Botelho, 130 A.3d at 176-77 (quoting JPL Livery Servs., 88 A.3d at 1142).
With respect to parking, the Public Offering Statement expressly states:
"One assigned parking space is allotted to each Unit with one bedroom. Each Unit that contains two bedrooms shall have one assigned parking space and the use of one valet parking space. The Commercial Unit will have sufficient parking spaces for its employees and guests in accordance with the Westerly Zoning Code. Two (2) assigned handicap parking spaces are assigned to the Units 203 and 204, which are the handicapped accessible Residential Unit and the Restaurant Unit, respectively." Unit Owner's Mot., Ex. E, § 3 (emphasis added).
The First Amended Declaration further delineates:
"There are eleven (11) designated parking spaces including 2 handicap parking spaces (one for the Handicapped Accessible Unit, W203, and one for the Restaurant Unit, W204), ten (10) 'valet parking spaces' and sufficient parking spaces for the Restaurant Unit (employees and patrons), intended to be used for the parking of private registered passenger cars of occupants/guests of Units as delineated in the survey plan attached hereto. The Executive Board reserves the right to change the location of the designated parking spaces and allow the valet service and/or Management Company to use unoccupied parking spaces in the Unit Owner's absence and non-use." WHI's Mot. for Summ. J. (June 2, 2017), Ex. 7, § 7.1(e) (emphasis added).
Based on the information before this Court, all Unit Owners in this complex have a two-bedroom unit. See Pimentel Consulting, Inc. Aff. (Pimentel Aff.) ¶ 4; Catalano Aff. ¶ 49, Oct. 26, 2017; see also Unit Owners' Supp. Mem. at n.5. Additionally, as elaborated in the Public Offering Statement and the First Amended Declaration, the Unit Owners were expected to receive one assigned parking space. See Unit Owners' Mot., Ex. E, § 3 ("Each Unit that contains two bedrooms shall have one assigned parking space . . . ."); WHI's Mot. for Summ. J. (June 2, 2017), Ex. 7, § 7.1(e) ("There are eleven (11) designated parking spaces . . . ."). Therefore, because the First Amended Declaration and Public Offering Statement are clear on its face, this Court declares that the Unit Owners at WHICA are each assigned one parking space on the WHIC property.
However, this Court cannot declare as a matter of law that the Unit Owners are assigned a second parking space on the WHIC property. The Zoning Ordinance states the following:
"A. Parking required. Any structure or use, erected or developed after the date of passage of this chapter, must provide off-street parking facilities . . . in accordance with the following regulations:
"(1) Residential dwelling: two car spaces for each dwelling unit.
"(2) Hotels/motels and inns: one space per room plus one for every three employees on the largest shift, plus one space per four seats capacity of all meeting/assembly rooms and associated restaurants." Westerly Zoning Ordinance Art. XI § 260-77(A)(1-2).
The Zoning Ordinance was adopted on October 16, 1998 and re-adopted on May 12, 2003. The WHIC was created on February 17, 2006. Therefore, the Zoning Ordinance is applicable to the WHIC. The RGB Parking Plan, drafted in 2005, was drafted in accordance with § 260-77(A)(2) and is consistent with that provision. See Unit Owners' Mot., Ex. G.
Additionally, the First Amended Declaration states that there were ten hotel units and one commercial restaurant unit on the WHIC property. See Pls.' Mot. for Summ. J. (June 2, 2017), Ex. 7. However, the Third Amendment to the First Amended Declaration "made a 'nominal' change by replacing the word 'Hotel' with 'Residential' 'for marketing and financing purposes and did not change the nature or use of the units[.]'" W.H.I., Inc., 2017 WL 3209052 at *2 n.3 (citing Marc B. Gertsacov, Esq. Aff. ¶ 7; WHI Mot. for Summ. J. (June 2, 2017), Ex. 21). Thus, the hotel units at the WHIC property were to be called Residential Units. See WHI Mot. for Summ. J. (June 2, 2017), Ex. 21 ("In every instance the words 'Hotel Unit' shall be replaced with 'Residential Unit' in the Declaration, and all exhibits thereto . . . . It is intended that the Residential Units may be used for transient, hotel rentals and/or as residential dwellings.").
Therefore, at the time of the Fourth Amendment to the First Amended Declaration, there were ten residential dwelling units and one restaurant unit. However, this Court notes that the restaurant unit has since been converted into a residential dwelling unit and two parking spaces were assigned to that unit. See Catalano Aff. ¶ 49, Oct. 26, 2017. For the WHIC property to be in conformance with the Zoning Ordinance, there must be "two car spaces for each dwelling unit." Westerly Zoning Ordinance Art. XI § 260-77(A)(1). As this Court has ruled, the Cross Easement does not provide the Unit Owners with the right to park on the Bayside property. Thus, the Unit Owners only have the right to park on the WHIC property. Additionally, to be in conformance with the Zoning Ordinance,
"each parking space shall have a minimum width of nine feet, a minimum length of 18 feet and shall be served by suitable aisles to permit access into all parking spaces. In no case shall the gross area per parking space be less than 270 square feet. Such plans and specifications shall include planted islands and buffers as well as a lighting plan." Id. § 260-77(B).
"[O]nly the municipality, through its town solicitor, may initiate proceedings to enforce local zoning ordinances." Zeilstra v. Barrington Zoning Bd. of Review, 417 A.2d 303, 309 (R.I. 1980) (quoting Town of Coventry v. Hickory Ridge Campground, Inc., 111 R.I. 716, 724, 306 A.2d 824, 828-29 (1973)). "[T]he Supreme and Superior Courts may issue extraordinary writs, both in law and equity, 'upon due proceedings in the name of the city or town, instituted by its city or town solicitor' to, among other things, compel compliance with any zoning ordinance and issue fines and other penalties." Key v. Brown Univ., 163 A.3d 1162, 1169 (R.I. 2017) (quoting G.L. 1956 § 45-24-62).
The Unit Owners, relying on the Zoning Ordinance, argue that they are not seeking to enforce the Zoning Ordinance, but rather cite to it because the WHICA must be in compliance with town ordinances as required under § 34-36.1-1.06 of the Act. This statute specifically states:
"A zoning . . . ordinance . . . may not prohibit the condominium form of ownership or impose any requirement upon a condominium which it would not impose upon a physically identical development under a different form of ownership, or otherwise regulate the creation, governance, or existence of the condominium form of ownership. Otherwise, no provision of this chapter invalidates or modifies any provision of any zoning . . . ordinance." Sec. 34-36.1-1.06.
As comment two to this statute suggests, the Act has no effect on real estate use laws; therefore, so long as a zoning ordinance does not discriminate against condominium associations, a condominium association must comply with that zoning ordinance. See id. at cmt. 2. "[E]ven though the declaratory-judgment power may not be utilized to compel [a] city to enforce the zoning regulations, '[t]he Superior Court has the power to construe a statute and to declare the rights and obligations of the parties.'" Key, 163 A.3d at 1171 (quoting P.J.C. Realty, Inc. v. Barry, 811 A.2d 1202, 1207 (R.I. 2002)). This Court therefore declares that § 34-36.1-1.06 of the Act makes it a requirement for condominium associations to abide by local zoning ordinances, and that § 260-77(A)(1) of the Zoning Ordinance requires two parking spaces for each residential dwelling unit. See Key, 163 A.3d at 1170-71 (finding that plaintiffs' request for declaration that defendants committed an unlawful use of their property under city's zoning ordinance was not a request to compel the city to enforce the zoning ordinance, but rather to recognize that a zoning violation existed and therefore appropriate).
At the same time, this Court remains mindful that it cannot enforce zoning ordinances without the town solicitor first bringing the action. See Zeilstra, 417 A.2d at 309. Based on the record before this Court, there is no evidence indicating that the Unit Owners sought assistance from the Town of Westerly to enforce the applicable zoning ordinance. See Key, 163 A.3d at 1170 (plaintiffs sought assistance from city to find defendants' use of artificial-turf field hockey field and its amenities were an unlawful use under applicable zoning ordinance). Furthermore, by interpreting § 34-36.1-1.06, this Court found that condominium associations must comply with zoning ordinances that are not discriminative toward condominium associations. Applying that statute to § 260-77(A)(1) would cause this Court to enforce the zoning provision without the assistance of the Town Solicitor. See id.
The Unit Owners further allege in each of their affidavits that based on the language from both the Public Offering Statement and the First Amended Declaration, one parking space is designated for the Unit Owners, but the second parking space only states that it is for use by the Unit Owners. See Unit Owners' Mot., Ex. E, § 3. The Unit Owners allege that since they purchased their units, they were provided two assigned parking spaces on either the WHIC property or the Bayside property. Unit Owners' Affs. ¶ 3. However, the Public Offering Statement expressly states that "[e]ach Unit that contains two bedrooms shall have one assigned parking space and the use of one valet parking space"; this language contradicts the Unit Owners' assertions in their affidavits. Unit Owners' Mot., Ex. E, § 3 (emphasis added). Notably, the Act does not provide a definition for the terms "assigned" or "use."
Under Rhode Island law, when a statute is clear and unambiguous, yet has terms left undefined, this Court must give the undefined term its plain and ordinary meaning. See D'Amico v. Johnston v. Partners, 866 A.2d 1222, 1224 (R.I. 2005). "In carrying out the process of determining the meaning of the words employed by an enacting legislature, reference to contemporaneous dictionaries is appropriate and often helpful." Chambers v. Ormiston, 935 A.2d 956, 962 (R.I. 2007). The definition of "assign" in the dictionary is broad; yet pertinent herein, "assign" is defined as "to transfer (property) to another especially in trust or for the benefit of creditors." Merriam-Webster's Online Dictionary, assign (last visited Apr. 26, 2018). "Use" is also broadly interpreted in the dictionary; but in relevant part is defined as "the privilege or benefit of using something." See Merriam-Webster's Online Dictionary, use (last visited Apr. 26, 2018). Both definitions indicate a difference in ownership: for "assign, " there is a transfer of property rights for the unit owner to now own a parking space along with his or her unit on the property. As for "use, " however, there is no mention of a transfer of ownership. Accordingly, the extent of these rights with respect to the second parking space remains in dispute, as mentioned above. See Unit Owners' Affs. ¶ 3; Unit Owners' Mot., Ex. E. For these reasons, then, there is no genuine dispute that the Unit Owners are assigned one parking space on the WHIC property, but there is a genuine dispute as to the extent of the Unit Owners' rights with respect to the second parking space on the WHIC property. This issue needs to be further evaluated at trial.
This Court does find, however, that the 2016 Commercial Parking Certificate does not give WHI Parking the right to use the parking spaces on the WHIC property. The 2016 Commercial Parking Certificate, dated April 22, 2016, lists the property location as "44 BAY ST-UNIT B200" and the applicant as "W.H.I. Inc." Unit Owners' Mot., Ex. C. Furthermore, the address for the applicant is listed as "44 Bay Street, Westerly, RI 02891, " and the 2016 renewal application-dated March 31, 2016-also contains the same addresses. Id. Although the 2016 Commercial Parking Certificate contains an exhibit of a plan of the Bayside property and the WHIC property, nowhere on the 2016 Commercial Parking Certificate does it give Declarant or WHI Parking the right to use the parking spaces on the WHIC property for commercial purposes. See Inland Am. Retail Mgmt. LLC v. Cinemaworld of Fla., Inc., 68 A.3d 457, 464 (R.I. 2013) (quoting Pearson v. Pearson, 11 A.3d 103, 109 (R.I. 2011)) ("Indeed, '[Rhode Island courts] decline to read nonexistent terms or limitations into a contract."). Therefore, this Court agrees with the Unit Owners and declares that the 2016 Commercial Parking Certificate does not permit WHI Parking to use the WHICA's parking spaces for commercial parking activities.
The WHIC property may not be used by anyone for commercial parking purposes without the permission of the WHICA. As determined below, there is a genuine issue of material fact as to whether the WHIC parking spaces are limited common elements or common elements. Regardless, permission is required to use the parking spaces on the WHIC property. For instance, if this Court were to find that the parking spaces are common elements, the Executive Board must give permission to those who seek to use such common elements. See
WHI's Mot. for Summ. J. (June 2, 2017), Ex. 7, § 7.1(d) ("A Unit Owner may not obstruct the Common Elements in any way without the prior written consent of the Executive Board . . . ."). Since unit owners would not be allowed to use parking spaces without the written consent of the Executive Board, this Court can infer that third parties would not be permitted to park on the WHIC property without the Executive Board's written consent. See id.; see also § 34-36.1-3.02(a)(6) ("[T]he association, even if unincorporated, may . . . [r]egulate the use . . . of common elements . . . ."). Similarly, if the parking spaces are limited common elements, then only those unit owners who own their respective parking spaces can grant permission to others to park at their designated parking spaces. See § 34-36.1-2.08(a) ("[T]he declaration shall specify to which unit or units each limited common element is allocated. That allocation may not be altered without the consent of the unit owners whose units are affected.").
Lastly, anyone who wishes to use the WHIC property for commercial purposes must file an application for a commercial parking certificate with the Town of Westerly. See Town of Westerly Zoning Ordinance Art. XI, § 260-77(B) ("Plans and specifications for the required parking facility and its access drives shall be submitted at the time of application for a permit for the main use."). For the foregoing reasons, this Court finds that the 2016 Commercial Parking Certificate does not give anyone the right to park commercially on the WHIC property and that parking commercially on the WHIC property requires the Executive Board's written consent and a commercial parking certificate from the Town of Westerly.
This Court remains mindful that only the municipality, through its town solicitor, may initiate proceedings to enforce local zoning ordinances. See Zeilstra, 417 A.2d at 309. However, in making this declaration, this Court is not seeking to enforce compliance with the Zoning Ordinance. See Key, 163 A.3d at 1171 (quoting P.J.C. Realty, Inc., 811 A.2d 1207) ("[E]ven though the declaratory-judgment power may not be utilized to compel [a] city to enforce the zoning regulations, '[t]he Superior Court has the power to construe a statute and to declare the rights and obligations of the parties.'"). Rather, it is merely recognizing that those who wish to use parking spaces on the WHIC property for commercial purposes must file an application with the Town of Westerly's Zoning Department.
C
Whether WHIC's Parking Spaces Are Limited Common Elements
The Unit Owners next assert that WHIC's parking spaces are limited common elements and carry with them an exclusive right of use that cannot be altered without the consent of the affected Unit Owners. The Unit Owners cite to the Public Offering Statement for support: section three states that "Limited Common Elements include exterior stairs, stairways, parking spaces and storage spaces, if any, for each Unit." Unit Owners Mot., Ex. E, § 3 (emphasis added). According to the Unit Owners, they have been provided two assigned parking spaces on either the WHIC property or the Bayside property. See Unit Owners' Affs. ¶ 3. Furthermore, the Unit Owners argue that WHI Parking and/or Declarant continually interfere with their two assigned parking spaces despite this Court's July 24, 2017 Decision. Id. at ¶ 4. In fact, Dr. Haronian has been unable to sell his unit as a result of this interference and the absence of the enforceable exclusive and transferable right to his two parking spaces on the property. Haronian Aff. ¶ 19.
The Unit Owners further argue that under the Condominium Act, limited common elements such as the parking spaces in this case cannot be altered without the consent of the unit that is affected. Sec. 34-36.1-2.08(a) ("[T]he declaration shall specify to which unit or units each limited common element is allocated. That allocation may not be altered without the consent of the unit owners whose units are affected."). They assert that they relied on the stated establishment and allotment of parking spaces associated with each unit in the Public Offering Statement which was a material consideration in electing to purchase the units. They also allege that they purchased their respective units based on the understanding they were also purchasing a protected property interest in two parking spaces that would be transferable together with their unit. Unit Owners' Aff. ¶ 5. According to the Unit Owners, Declarant violated this section of the Act and breached its fiduciary duties when it changed their parking configuration and illegally assigned the Unit Owners' spaces to the adjoining Bayside property to which they do not have an enforceable property interest for parking. For these reasons, the Unit Owners request that they be assigned parking spaces in accordance with any of the three original parking plans that provided sufficient parking spaces on the WHIC property.
In response, Plaintiffs first argue that by accepting the deed to the condominium units, the Unit Owners accepted such conveyance subject to the Declaration, its Amendments, and the plats and plans associated therewith as recorded in the Westerly Land Evidence Records. In addition, the parking plans up to and including the fourth amendment to the First Amended Declaration are also binding and effective. Plaintiffs also point this Court to the Declaration and its amendments, which delineate common elements and limited common elements. According to Plaintiffs, the Declaration does not declare that the parking spaces are exclusive to the individual units or that the individual parking spaces are deeded rights; rather, it states that the parking spaces are assigned spaces with the use of one valet parking space when not in use. WHI's Mot. for Summ. J. (June 2, 2017), Ex. 7. Additionally, Plaintiffs point out similar language in the Public Offering Statement, which the Unit Owners claim they received at the time they purchased their units. Although there were amendments to the Declaration, § 7.1(e) to the Declaration stayed the same with the exception that the number of valet parking spaces decreased from eleven to ten parking spaces. However, Plaintiffs contend that the designation of parking spaces and location never changed. According to Plaintiffs, as of July 21, 2006, the parking was established as a total of twenty-one parking spaces with the understanding that they could not all be accommodated on the WHIC property. WHI's Mot., Ex. 5.
This Court finds that there is a genuine issue of material fact with regard to whether the parking spaces on the WHIC property are limited common elements. The Act defines common elements as "all portions of a condominium other than the units, " whereas limited common elements are defined as "a portion of the common elements allocated by the declaration or by operation of § 34-36.1-2.02(2) or (4) for the exclusive use of one or more but fewer than all of the units." Sec. 34-36.1-1.03. The Act further designates certain portions of the condominium property that are considered "Common Elements, " and this provision does not provide that parking is per se a common element or limited common element. See § 34-36.1-2.02. As identified by the Unit Owners, section three of the Public Offering Statement states that "Limited Common Elements include exterior stairs, stairways, parking spaces and storage spaces, if any, for each Unit." Unit Owners Mot., Ex. E (emphasis added). In addition, section one of the Public Offering Statement indicates that "[t]he owner or owners of the Unit or Units to which the Limited Common Elements are assigned has an exclusive right to use the Limited Common Elements designated for the particular Unit." Id. (emphasis added). It is clear from the record that the Unit Owners received the Public Offering Statement at the time they purchased their units. See Unit Owners Affs. ¶ 5; Catalano Aff. ¶ 33, Oct. 26, 2017. From this reading then, it might be assumed that the Unit Owners expected to have an exclusive right to use their parking spaces on the WHIC property.
However, with respect to this issue, the Declaration, First Amended Declaration, and Amended Site Survey are inconsistent with the Public Offering Statement. Specifically, the Declaration and First Amended Declaration do not specify whether parking spaces on the WHIC property are limited common elements. Moreover, the Amended Site Survey labels limited common elements as "LCE" and common elements as "CE" on the WHIC property. See WHI's Mot., Ex. C. Notably, the parking spaces are labeled "CE" on the survey; thus indicating that the parking spaces are common elements on the WHIC property. Plaintiffs state that the Unit Owners, along with the Public Offering Statement, also received the First Amended Declaration and the Amended Site Survey-which was attached to the First Amended Declaration-prior to purchasing their respective units. See Catalano Aff. ¶ 21, Oct. 26, 2017. The Unit Owners have also conceded that they received the First Amended Declaration along with the Public Offering Statement prior to purchasing their units. See Unit Owners' Mot. ¶ 14. Therefore, there is still an issue of material fact regarding the parking spaces' status. See Rose, 149 A.3d at 139.
Furthermore, it is unclear to this Court at this time which site survey plan is the controlling plan: the Unit Owners assert that the RGB Parking Plan is the controlling document, whereas Plaintiffs claim that the Amended Site Survey holds weight. This is also an important determination because the site survey plan that controls not only determines the status of whether the parking spaces are limited common elements, but it also decides the exact number of parking spaces on the WHIC property. Additionally, the Unit Owners' request for a declaration that Declarant's interference with and/or elimination of the Unit Owners' parking spaces on the WHIC property violates § 34-36.1-2.08(a) of the Act likewise centers on the issue of whether the parking spaces are limited common elements or common elements, and cannot be determined by this Court at this time. For these reasons, this Court denies the Unit Owners' motion for summary judgment on the issue of whether the parking spaces on the WHIC property are limited common elements or common elements.
D
Whether the PMA Is Void or Voidable
On January 15, 2006, WHI, WHI Parking, and BSI entered into the PMA to manage the parking areas that would ultimately be owned by both WHICA and BSA's unit owners. According to the Unit Owners, each of the parties to the PMA was a Catalano related and controlled entity and an "[a]ffiliate of . . . Declarant" as described in § 34-36.1-1.03(1) of the Act. The Unit Owners contend that the PMA was entered into at a time when Catalano controlled every aspect of what would become the WHIC and Bayside properties and before the WHICA and/or BSA existed. Furthermore, the Unit Owners point out that WHI Parking has no legal standing before this Court since it is not currently registered with the Rhode Island Secretary of State.
The Unit Owners claim (1) that the PMA is unconscionable and must be declared void for lack of consideration, and (2) that it is voidable pursuant to the terms under the Act. With respect to the first argument, the Unit Owners argue that WHICA never adopted, approved, and/or agreed to be bound by the PMA, and that the PMA does not benefit the Unit Owners or WHICA. In support of this argument, the Unit Owners point to § 4(b) of the PMA, which states that WHI Parking was to pay nothing for its use of the WHIC property since it has a preexisting nonconforming use of its off-street parking, and "[t]he WHI Association when created will not receive Base Rent." WHI's Mot., Ex. 1. In fact, the Unit Owners point out that WHI Parking pays only $1000 in annual rent to its parent company, WHI, for "the right to use the lot and facilities of the Watch Hill Inn owned by WHI . . . . This Base Rent and any Additional Rent will not be transferred to the WHI Association at any time." Id. at § 4(c). Furthermore, the entire purpose, as alleged by the Unit Owners, of the PMA was to provide an economic benefit to
Declarant because § 3(b) of the PMA stated that "all revenue derived form [sic] the Parking income is for the benefit of the Operator." Id. at § 3(b). Accordingly, the Unit Owners conclude that there was no consideration for the PMA, which must be declared void.
With respect to the second argument, the Unit Owners indicate that this Court ruled, in its July 24, 2017 Decision, that the Act is a consumer protection act intended to protect purchasers of condominium units. See W.H.I., Inc. v. Courter, No. WC-2015-0463, 2017 WL 3209052, at *13 (R.I. Super. July 24, 2017) (citing Sisto v. Am. Condo. Ass'n, Inc., 68 A.3d 603, 614 n.9 (R.I. 2013); Am. Condo. Ass'n, Inc. v. IDC, Inc., 844 A.2d 117, 128 (R.I. 2004)). The statute provides:
"If entered into before the executive board elected by the unit owners pursuant to § 34-36.1-3.03(f) takes office, (1) any management contract, employment contract, or lease of recreational or parking areas or facilities, (2) any other contract or lease between the association and a declarant or an affiliate of a declarant, or (3) any contract or lease that is not bona fide or was unconscionable to the unit owners at the time entered into under the circumstances then prevailing, may be terminated without penalty by the association at any time after the executive board elected by the unit owners pursuant to § 34-36.1-3.03(f) takes office upon not less than ninety (90) days' notice to the other party." Sec. 34-36.1-3.05.
Furthermore, § 34-36.1-3.03(f) states:
"Not later than the termination of any period of declarant control, the unit owners shall elect an executive board of at least (3) members, at least a majority of whom must be unit owners. The executive board shall elect the officers. The executive board members and officers shall take office upon election." Sec. 34-36.1-3.03(f).
According to the Unit Owners, the PMA was entered into before the Executive Board took office, as required by § 34-36.1-3.03(f). Additionally, the Unit Owners contend that the PMA meets all three types of contracts listed under § 34-36.1-3.05. Specifically, with regard to the third type of contract-i.e., that the contract or lease must not be bona fide or was unconscionable at the time entered into under the circumstances-the Unit Owners point to the following allegations for support: (1) the PMA predates the formation of the WHICA and was not disclosed to the Unit Owners at the time they purchased their units, nor was it disclosed in the Public Offering Statement; (2) Declarant never informed the Unit Owners that the units they purchased would not include recognizable property interests in two parking spaces that would be transferable together with their units; (3) Declarant never informed the Unit Owners that there was "a pre-existing non-conforming use of its off-street parking" as stated in § 4(b) of the PMA; (4) Declarant and the PMA have interfered with the Unit Owners' exclusive use of their parking spaces since they purchased their units; (5) the Unit Owners have not received any benefit from the PMA; (6) the PMA has usurped WHICA's and/or the Unit Owners' business opportunity; (7) the PMA has resulted in unconscionable charges being imposed on the Unit Owners for use of their own parking spaces and use of these parking spaces by others (to which the Unit Owners request this Court that such charges be deemed null and void); (8) the PMA interferes with WHICA's rights pursuant to the Easement; (9) the PMA has and continues to negatively impact the value of the Unit Owners' units as well as their ability to sell them; (10) the Unit Owners are not aware of any "lot and facilities of the Watch Hill Inn owned by WHI" as identified in the PMA at § 4(c); and (11) the parties to the PMA represented that the parking must be in conformance with the Westerly Zoning Codes, but the PMA seeks to establish a public parking facility on two abutting parcels without the requisite municipal license. See Haronian Aff. ¶ 19; Unit Owners Affs. ¶¶ 7-11.
The Unit Owners also stress that it is appropriate to terminate the PMA because Declarant violated its fiduciary duties to the Unit Owners by violating their parking rights. Specifically, the Unit Owners claim that Declarant owed a fiduciary duty and a duty of good faith and fair dealing to each of the Unit Owners to act in their best interest and not for the benefit of Declarant or an affiliate. Under § 34-36.1-3.03(a)(1) of the Act, Declarant's Executive Board, and thus Declarant himself since he was on the Executive Board, "are required to exercise: (1) [i]f appointed by the declarant, the care required of fiduciaries of the unit owners . . . ." Sec. 34-36.1-3.03(a)(1) (emphasis added). The Unit Owners then allege that Declarant violated these duties by, inter alia, continuing to enforce the PMA and by unilaterally changing limitations on the Unit Owners' limited common element parking rights. For these reasons, the Unit Owners request that this Court find that the WHICA has the ability to terminate the PMA in accordance with § 34-36.1-3.05 of the Act. Unit Owners Affs. ¶ 13.
In making such a determination, the Unit Owners also request that this Court preclude Declarant, as well as any other owner of units that is affiliated with Declarant, from casting a ballot on the question of whether to void the PMA. The Unit Owners contend Declarant, as well as any unit owner affiliated with Declarant, has a conflict of interest with respect to any vote in which they will financially benefit either directly or through an entity they are associated with that will have a beneficial interest. Specifically, the Unit Owners argue that Declarant put the financial interest of its affiliated company ahead of them through the ten years of activities pursuant to the PMA. Moreover, the Unit Owners contend that the consumer protection purpose of the Act would be defeated if a majority owner could simply vote to ratify a contract that falls under the language of § 34-36.1-3.05.
In response, Plaintiffs argue that the parking on WHIC property was considered "grandfathered" as a nonconforming use, since there existed insufficient parking to accommodate the property and its uses as a whole. Additionally, Plaintiffs argue that the PMA is a necessity because it operates all of the parking spaces and assignments allocated on the Bayside property and ten parking spaces on the WHIC property. According to § 7.1(e) of the Amended Declaration, valet parking spaces are allocated to the "valet service and/or Management Company to use unoccupied parking spaces in the Unit Owners' absence and non-use." WHI, Inc.'s Mot. for Summ. J. (June 2, 2017), Ex. 7, § 7.1(e). In turn, Plaintiffs argue that the PMA provides the terms and conditions, which coordinate and create the process by which the valet parking spaces are used while they are not in use. Furthermore, Plaintiffs argue that § 7.1(e) of the Amended Declaration only provides the Executive Board with the ability to assign the eleven designated parking spaces; it does not provide the Executive Board with the use of those parking spaces, as those ten parking spaces are permitted to be used by the valet services or the management company. Such arrangement, according to Plaintiffs, has never been changed since the Declaration was filed and never rejected by the Executive Board since their first meeting on July 14, 2007. See Catalano Aff. ¶ 41, Oct. 26, 2017. Accordingly, Plaintiffs state that the Unit Owners cannot claim that they were unaware of this problem, and the Executive Board, through its actions over the years, has ratified the PMA.
Plaintiffs also argue that the PMA is not unconscionable and not unreasonable such that it permits WHICA to breach or void the same, and that to find unconscionability, the PMA must be both procedurally and substantively unconscionable. In support of this argument, Plaintiffs assert that the PMA is necessary to effectuate the intent and actual language of the Declaration, the Amended Declaration, and the Cross Easement and its plans. Moreover, the PMA has been in place since 2006, and Plaintiffs point out that the Executive Board had notice of it and thus had ample time to review it. According to Plaintiffs, the PMA also facilitated parking during a time when the restaurant operated, namely between 2006 and 2010; during that time period, the Unit Owners never parked on the WHIC property and therefore were aware and abided by the parking constraints. See Catalano Aff. ¶ 10, Oct. 26, 2017.
Plaintiffs next assert that the Unit Owners and/or the WHICA cannot terminate the PMA under § 34-36.1-3.05 of the Act. As stated under the statute, "any contract or lease that is not bona fide or was unconscionable to the unit owners at the time entered into under the circumstances then prevailing, may be terminated without penalty by the association at any time after the executive board . . . takes office . . . ." Sec. 34-36.1-3.05. To Plaintiffs, the PMA was between two adjacent property owners and WHI Parking prior to the existence of the WHICA and any unit owners, and prior to the enactment of the Declaration. For this reason, Plaintiffs assert the Unit Owners cannot contend that the PMA was unconscionable. Lastly, Plaintiffs argue that the Unit Owners' claim that Declarant breached its fiduciary duty should be dismissed because the duty owed by Declarant to the Unit Owners is not one of a fiduciary, but of ordinary and reasonable care. According to Plaintiffs, the Unit Owners-and not Declarant-elected the Executive Board.
This Court first addresses whether the PMA lacks consideration and should be declared void by this Court. "'It is a well-established principle that a valid contract requires competent parties, subject matter, a legal consideration, mutuality of agreement, and mutuality of obligation.'" Andoscia v. Town of N. Smithfield, 159 A.3d 79, 82 (R.I. 2017) (quoting Voccola v. Forte, 139 A.3d 404, 414 (R.I. 2016)) (internal quotation marks omitted). "'[C]onsideration consists of some legal right acquired by the promisor in consideration of his [or her] promise, or forborne by the promisee in consideration of such promise.'" Id. (quoting DeLuca v. City of Cranston, 22 A.3d 382, 384 (R.I. 2011) (mem.)) (internal quotation marks omitted). In determining whether there was sufficient consideration, this Court employs the bargained-for exchange test. DeAngelis v. DeAngelis, 923 A.2d 1274, 1279 (R.I. 2007). This test finds that something is bargained-for, and therefore constitutes consideration, "'if it is sought by the promisor in exchange for his [or her] promise and is given by the promisee in exchange for that promise.'" Id. (quoting Filippi v. Filippi, 818 A.2d 608, 624 (R.I. 2003)).
This Court notes that under Rhode Island law, the adequacy of consideration is not material. Philip Carey Mfg. v. General Products Co., 89 R.I. 136, 144, 151 A.2d 487, 492 (1959) (citing Salvas v. Jussaume, 50 R.I. 75, 75145 A. 97, 98 (1929)). However, because there is a genuine dispute of material fact as to whether the Unit Owners were put on notice of the PMA at the time they purchased their units, this Court determines it is premature at this time to declare that the contract is void. Nonetheless, as determined below, this Court finds that the PMA can be declared void and terminated without penalty by the WHICA pursuant to § 34-36.1-3.05 of the Act.
The Unit Owners next argue that the PMA can be declared void by the WHICA under § 34-36.1-3.05 of the Act. "[W]hen the administration of a condominium complex is at issue, 'the condominium statutes and the declaration control[] the relationship between the parties.'" Town Houses at Bonnet Shores Condo. Ass'n v. Langlois, 45 A.3d 577, 582 (R.I. 2012) (quoting Artesani v. Glenwood Park Condo. Ass'n, 750 A.2d 961, 963 (R.I. 2000)). A "sweetheart" contract, or management contract, is an agreement whereby the association contracts with another person or entity to assume the obligations of the day-to-day operation of the condominium property. Poliakoff, 1 Law of Condominium Operations § 8.31 (2017 ed.). The initial management contract is frequently executed by the developer and a developer owned or controlled management firm. Id.
Rhode Island, through the Act, has addressed management contracts and when they can be terminated. Section 34-36.1-3.05 of the Act states in pertinent part:
"If entered into before the executive board elected by the unit owners pursuant to § 34-36.1-3.03(f) takes office, (1) any management contract, employment contract, or lease of recreational or parking areas or facilities, (2) any other contract or lease between the association and a declarant or an affiliate of a declarant, or (3) any contract or lease that is not bona fide or was unconscionable to the unit owners at the time entered into under the circumstances then prevailing, may be terminated without penalty by the association at any time after the executive board elected by the unit owners pursuant to § 34-36.1-3.03(f) takes office upon not less than ninety (90) days' notice to the other party." Sec. 34-36.1-3.05.
As the comments to this section suggest, "[t]his section deals with a common problem in the development of condominium projects: the temptation on the part of the developer, while in control of the association, to enter into, on behalf of the association, long-term contracts and leases with himself or with an affiliated entity." Id. at cmt. 1. In addition to imposing a fiduciary duty upon all executive board members appointed by declarant as required under § 34-36.1-3.03(a), § 34-36.1-3.05 "provides for the termination of certain contracts and leases made during a period of declarant control." Id. Describing the types of contracts that this section considers to be voidable, the comments state:
"[i]n addition to contracts or leases made by a declarant with himself [or herself] or with an affiliated entity, there are also certain contracts and leases so critical to the operation of the condominium and to the unit owners' full enjoyment of their rights of ownership that they too should be voidable by the unit owners upon the expiration of any period of declarant control." Id. at cmt. 2 (emphasis added).
The comments did note, however, that a statutorily-sanctioned right of cancellation should not be applicable to all contracts or leases in which a declarant may enter into in the course of developing a condominium project. Id. As an illustration, the comments provide an example where a commercial tenant would not be willing to invest substantial amounts of improvements for the operation of his or her business if the lease could unilaterally be cancelled by the association. Id. Therefore, the comments stress that
"upon the expiration of any period of declarant control, the association may terminate without penalty, any 'critical' contract (i.e., any management contract, employment contract, or lease of recreational or parking areas or facilities) entered into during a period of declarant control, any contract or lease to which the declarant or an affiliate of the declarant is a party, or any contract or lease previously entered into by the declarant which is not bona fide or which was unconscionable to the unit owners at the time entered into under the circumstances then prevailing." Id. (emphasis added).
This Court first notes that no Rhode Island court has squarely addressed § 34-36.1-3.05 of the Act. Our Supreme Court has, however, stated that "[t]he Rhode Island Condominium Act is a consumer protection statute." America Condo. Ass'n, Inc. v. IDC, Inc., 844 A.2d 117, 128 (R.I. 2004). "Furthermore, '[w]hen there exists a dominance of control by one owner, it becomes more important to allow minority owners greater participation in the administration of the commonly owned property, and increases the need for the majority owner to follow all the statutes and the declaration.'" Id. (quoting Artesani, 750 A.2d at 963).
The PMA's main purpose is managing the parking spaces on the WHIC property and Bayside property. Specifically, the PMA states:
"b. Parking Spaces - The Parties agree Operator will take possession of all parking spaces, and with the exception of the four Deeded Janice Decourcy spaces, Operator may rent for profit the balance of the parking spaces (both assigned and non-assigned) to the general public, restaurant patrons, and guest of the dwelling spaces, at a parking rate determined solely by the Operator. The Parties further agree all revenue derived form [sic] the Parking income is for the benefit of the Operator.
"i. Operator agrees not to rent an assigned parking space when the assignee individual is in occupancy.
"ii. When assignee individuals are not in occupancy, Operator may rent the space to the general public. However, Operator agrees to keep in its possession the key of such rented vehicle . . . [and] relocate the rented vehicle to another parking space thereby allowing the assignee individual access to its assigned space.
"iii. Operator will not permit parking space renters to park in assigned spaces overnight unless approved by Management." Unit Owners' Mot., Ex. A, § 3(b).
First, this Court notes that based on this provision, if Declarant is charging any services to the Unit Owners directly for parking on their own property, it is in violation of the PMA, since nowhere in the PMA does it state that WHI Parking may rent for profit any parking space to the Unit Owners. See Inland Am. Retail Mgmt. LLC, 68 A.3d at 464 (quoting Pearson, 11 A.3d at 109) ("Indeed, '[Rhode Island courts] decline to read nonexistent terms or limitations into a contract."). Thus, the relevancy of the PMA to this case rests on any rent charged to "guest[s] of the dwelling spaces." Unit Owners' Mot., Ex. A, § 3(b).
Nonetheless, the PMA is certainly a management contract identified under § 34-36.1-3.05 of the Act that can be terminated by the WHICA. The PMA was made before the Executive Board of each condominium association was elected, as required by the Act. See § 34-36.1-3.05; see also § 34-36.1-3.03(f) ("Not later than the termination of any period of declarant control, the unit owners shall elect an executive board of at least three (3) members, at least a majority of whom must be unit owners. The executive board shall elect the officers. The executive board members and officers shall take office upon election."). At the time the PMA was entered into, no election for the Executive Board had taken place; in fact, the condominium associations had yet to be created. Furthermore, the PMA was a contract between WHI, BSI, and WHI Parking, and specifically stated that it was binding on the WHICA and BSA when they were created.
Unit Owners' Mot., Ex. A. Additionally, the PMA also was a contract where Declarant and affiliates of Declarant were parties. First, Declarant-W.H.I.-was a party to the PMA; even if no other parties in the PMA had connections to Declarant, the fact that Declarant is a party to the agreement is sufficient to find the PMA voidable by the Unit Owners. See § 34-36.1-3.05 cmt. 2. This Court also notes that the other parties to the PMA are also affiliated with Declarant. As defined by the Act, an "affiliate of a declarant" is any person who controls, is controlled by, or is under common control with a declarant. Sec. 34-36.1-1.03(1). As further explained,
The Act defines a "person" to be, inter alia, a natural person, corporation, partnership, association, joint venture, or other legal or commercial entity. Sec. 34-36.1-1.03(22).
"(i) A person 'controls' a declarant if the person:
"(A) Is a general partner, officer, director, or employer of the declarant,
"(B) Directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing, more than twenty percent (20%) of the voting interest in the declarant,
"(C) Controls in any manner the election of a majority of the directors of the declarant, or
"(D) Has contributed more than twenty percent (20%) of the capital of the declarant.
"(ii) A person is "controlled by" a declarant if the declarant:
"(A) Is a general partner, officer, director, or employer of the person,
"(B) Directly or indirectly or acting in concert with one or more other persons, or through one or more subsidiaries, owns, controls, holds with power to vote, or holds proxies representing, more than twenty percent (20%) of the voting interest in the person,
"(C) Controls in any manner the election of a majority of the directors of the person, or
"(D) Has contributed more than twenty percent (20%) of the capital of the person." Sec. 34-36.1-1.03(1)(i-ii).
Under the express language of § 34-36.1-1.03(i)(A), Catalano controls Declarant- WHI-because as its Vice President, Catalano is an officer of Declarant. Catalano also signed the agreement on behalf of BSI as its President, and WHI Parking was a wholly owned subsidiary company of Declarant. See Unit Owners' Mot., Ex. A. Therefore, each party to the PMA was affiliated with Declarant, and because Declarant was a party as well, the PMA may be voidable by the Unit Owners. This Court also notes that if the Unit Owners vote to void the PMA, then any charges pending under the PMA-including the September 11, 2015 WHI Parking, LLC invoice to Courter/Sorgenfrei, LLC in the amount of $10, 315.00 for the 2015 season-will be voided as well. Unit Owners' Mot., Ex. D; see Cruz v. Mortg. Elec. Registration Sys., Inc., 108 A.3d 992, 997 (R.I. 2015) (quoting Moura v. Mortg. Elec. Registration Sys., Inc., 90 A.3d 852, 857 (R.I. 2014)) ("[A] voidable contract affects only one party and 'may be either ratified or rescinded at that party's election.'"); Williston on Contracts § 1:20 (4th ed. 2017) ("Unless rescinded, a voidable contract imposes on the parties the same obligations as if it were not voidable." (emphasis added)). However, as discussed below, there is still a genuine issue of material fact regarding whether the Unit Owners can recover the charges they paid to WHI Parking over the years under the PMA.
Though this Court's inquiry can conclude since the PMA is classified as "any other contract or lease between the association and a declarant or an affiliate of a declarant" under § 34-36.1-3.05, this Court also notes that the PMA is "[a] management contract, employment contract, or lease of recreational or parking areas or facilities." Sec. 34-36.1-3.05 (emphasis added). The comments to this section further state that the association may terminate these "critical" contracts "entered into during a period of declarant control." Id. at cmt. 2. It is clear to this Court that the PMA is a "critical" contract, for it is a management contract of parking areas on the WHIC and Bayside properties. See Unit Owners' Mot., Ex. A, § 3(b) ("Operator may rent for profit the balance of the parking spaces (both assigned and non-assigned) to the general public, restaurant patrons, and guest of the dwelling spaces, at a parking rate determined solely by the Operator."). Additionally, the PMA was entered into on January 15, 2006, whereas the WHICA was not created until February 17, 2006, when the Declaration was recorded. Rhode Island case law has yet to determine when declarant control begins, and the Act is silent on this issue. Nevertheless, the PMA was entered into when Declarant owned and controlled every aspect of what would become the WHIC and Bayside properties. Moreover, Declarant had all of the intention of making this contract binding on the WHICA and BSA at the time of its execution. See Unit Owners' Mot., Ex. A ("Whereas, WHI and BSI intend to file their respective condominium documents with the State of Rhode Island and subsequently record the documents with the Town of Westerly, at which time WHI and BSI will transfer their property rights and ownership to their respective Association. Consequently, the Associations will replace WHI and BSI, and this Agreement will become binding between the Associations and the Operator at the time of the recordings . . . . All the obligations of the Parties contained herein will be preserved."); A.F. Lusi Constr., 847 A.2d at 258. It is therefore clear that the PMA imposed an obligation on the condominium associations, and when the WHICA and BSA were eventually created, the PMA was enforced as projected during Declarant's control. Therefore, the PMA also classifies under § 34-36.1-3.05(1) of the Act, and is voidable by the Unit Owners.
Lastly, there is a genuine issue of material fact regarding whether the PMA is unconscionable or commercially unreasonable. The Unit Owners assert that the PMA was not disclosed to them at the time that they purchased their units, and it was not disclosed in the Public Offering Statement. See Unit Owners' Affs. ¶ 7. Plaintiffs dispute this fact and argue that the Unit Owners knew of the parking constraints on the property, and they all agreed to be subject to such a constraint when they accepted their condominium units, which were subject to the Declaration and Amended Declaration. Put simply, there is insufficient evidence at this time for this Court to make a determination as a matter of law that the PMA is unconscionable or commercially unreasonable. For this reason, then, the Unit Owners' request that this Court find the PMA void as unconscionable at the time the contract was made pursuant to § 34-36.1-1.10(a) of the Act is denied. Nonetheless, this ruling has no effect on the Unit Owners' vote to void the PMA, for the facts have established that the PMA is a voidable contract under §§ 34-36.1-3.05(1) and (2). Therefore, for the aforementioned reasons, the Unit Owners have a right to cancel the PMA under §§ 34-36.1-3.05(1) and (2) of the Act.
In addition to voiding the PMA, the Unit Owners also request that since Declarant, Catalano, and any affiliate of Declarant have a conflict of interest with regard to any vote to terminate the PMA, they therefore may not vote on such motion. The Act is silent with respect to whether Declarant or an affiliate of Declarant can participate in the vote regarding whether to cancel the PMA, a management contract that Declarant and affiliates of Declarant created before the condominium associations were created. However, this Court notes that the Florida Condominium Act specifically states that any vote to cancel an agreement entered into by the association before the association assumed control can be subject to a vote to cancel such agreement by the unit owners at the exclusion of the declarant. See Fla. Stat. Ann. § 718.302(1)(a) ("If the association operates only one condominium and the unit owners other than the developer have assumed control of the association, or if unit owners other than the developer own not less than 75 percent of the voting interests in the condominium, the cancellation shall be by concurrence of the owners of not less than 75 percent of the voting interests other than the voting interests owned by the developer." (emphasis added)). The Uniform Condominium Act and the Act-which mirrors the Uniform Condominium Act with respect to cancellation provisions of "sweetheart" management contracts-take a similar approach: they both make the contract voidable when the control of the association is transferred from the developer to the unit owners. See § 34-36.1-3.05; Unif. Condo. Act § 3-105; see also Poliakoff, 1 Law of Condominium Operations § 8:39 (2017 ed.).
Because of Florida and Rhode Island's inherent similarities on cancelling a management contract that was entered into before the condominium association took control, this Court concludes that when the Unit Owners vote to determine whether the PMA should be void, the voting interests of the Declarant and any affiliate of Declarant who also had an interest in the PMA will be excluded. See Fla. Stat. Ann. § 718.302(1)(a); § 34-36.1-3.05. Therefore, when the Unit Owners vote on the validity of the PMA, Declarant, Catalano, and any other owner of units in the WHICA that is affiliated with Declarant may not participate in the vote.
This Court also notes that many corporate law cases similarly allow disinterested shareholders and/or officers of a corporation to vote and ratify dealings of a corporation where one or more of its officers are adversely interested. Tomaino v. Concord Oil of Newport, Inc., 709 A.2d 1016, 1021 (R.I. 1998) (citing Winchell v. Plywood Corp., 324 Mass. 171, 176-77, 85 N.E.2d 313, 316-17 (1949)) (applying Massachusetts law when a corporate fiduciary enters into a transaction with a corporate entity that he or she also serves as a fiduciary and stating, "[t]o be valid, the transaction must have been assented to by the disinterested officers and/or stockholders of the corporation with full knowledge of all the facts."); see also In re Investors Bancorp., Inc. v. Stockholder Litig., 2017 WL 6374741, at *1 (Del. 2017) ("[S]tockholder ratification means a majority of fully informed, uncoerced, and disinterested stockholders approved board action, which, if challenged, typically leads to a deferential business judgment standard of review." (emphasis added)). Likewise, as discussed further in this Decision, this Court has determined that Declarant, as a majority unit owner, has a fiduciary duty to keep the minority Unit Owners informed. See Artesani, 750 A.2d at 963. Therefore, just like disinterested officers and/or stockholders can vote on conflict of interest transactions between a corporation and its officers and/or directors, here, the disinterested Unit Owners have the opportunity to vote on the validity of the PMA, a transaction that Declarant entered into when it owed a fiduciary duty to the minority Unit Owners.
Both parties also dispute whether Declarant owed a fiduciary duty as an officer of the Executive Board. Before reaching this issue, however, this Court notes that "'[w]hen there exists a dominance of control by one owner, it becomes more important to allow minority owners greater participation in the administration of the commonly owned property, and increases the need for the majority owner to follow all the statutes and the declaration.'" America Condo. Ass'n, 844 A.2d at 128 (quoting Artesani, 750 A.2d at 963). With this in mind, our Supreme Court also stressed-within the context of condominium disputes-that "[t]he majority owner has a fiduciary duty to the minority owners that includes a duty to keep the minority owners informed." Artesani, 750 A.2d at 963. Here, Declarant is a majority owner, for it currently owns five units (W201, W202, W203, W402, and W501), and eighty percent of the units in WHICA have yet to be sold. Catalano Aff. ¶ 3, Oct. 26, 2017. Moreover, Declarant, in its papers, consistently refers to the Unit Owners as "Minority Unit Owners." See Pls.' Mem. in Obj. to Summ. J. at 7, 10, 23-25, 34, 39-43, 45. For this reason, this Court finds that Declarant, as a majority owner, owes a fiduciary duty to the minority owners to keep them informed. Artesani, 750 A.2d at 963.
However, there is a genuine dispute as to material fact regarding whether Declarant owed a fiduciary duty in its capacity as an officer on the Executive Board. As stated under § 34-36.1-3.03(a) of the Act,
"Except as provided in the declaration, the bylaws, subsection (b), or in other provisions of this chapter, the executive board may act in all instances on behalf of the association. In the performance of their duties, the officers and members of the executive board are required to exercise:
"(1) If appointed by the declarant, the care required of fiduciaries of the unit owners; and
"(2) If elected by the unit owners, ordinary and reasonable care." Sec. 34-36.1-3.03(a).
Plaintiffs argue that because the Executive Board has been appointed yearly by the Unit Owners, Declarant-as an officer of the Executive Board-is only required to exercise ordinary and reasonable care. The Unit Owners-though conceding this fact-nonetheless argue that the minutes of board meetings reveal that Declarant exercised unilateral control over the Executive Board, self-appointed itself, and had a right to veto any vote toward appointing an Executive Board. This action, the Unit Owners contend, did not actually constitute Declarant's appointment by the Unit Owners, and therefore it owes a fiduciary duty to the unit owners.
This Court reserves judgment as a matter of law with respect to whether a fiduciary duty is owed here under § 34-36.1-3.03(a). In line with the Unit Owners' arguments with respect to this issue, this Court has already determined that there is a genuine dispute of material fact regarding whether the PMA is self-serving and, as mentioned above, whether the parking spaces on the WHIC property are limited common elements or common elements. Therefore, the Unit Owners' motion for summary judgment with respect to whether Declarant owes a fiduciary duty as an officer of the Executive Board to the Unit Owners is denied.
E
Whether Declarant Usurped WHICA's Business Opportunity
The Unit Owners next assert that Declarant has usurped WHICA's business opportunity by running a for-profit parking venture. According to the Unit Owners, the use of the parking spaces located on WHIC's property for commercial purposes constitutes a business opportunity for WHICA and/or the Unit Owners. They assert that Catalano, through his affiliated entities including WHI Parking, usurped this business opportunity for his personal gain and enrichment. In support of this argument, the Unit Owners cite to § 34-36.1-3.14 of the Act, which states the following:
"[A]ny surplus funds of the association remaining after payment of or provision for common expenses and any prepayment of reserves must be paid to the unit owners in proportion to their common expense liability or credited to them to reduce their future common expense assessments." Sec. 34-36.1-3.14.
To the Unit Owners, Declarant unilaterally changed their parking assignments, eliminated almost half of the spaces, erected planters in the right-of-way, and relocated WHIC parking to the abutting Bayside property where the Unit Owners have no ownership rights. Therefore, the Unit Owners contend that these actions violated (1) the Town of Westerly's off-street parking regulations; (2) the approvals that Declarant received from the Town of Westerly; (3) the Act; (4) the Public Offering Statement; and (5) the First Amended Declaration. Accordingly, the Unit Owners maintain that any of Declarant or WHI Parking's ill-gotten gains and profits should be disgorged to WHICA and/or the Unit Owners.
In response, Plaintiffs claim that the PMA is not a "special deal" for Declarant because regardless of its existence, the management of the valet parking spaces cannot be accomplished without some type of manager or operational mechanism in place to adequately and logically accommodate the insufficient parking at the WHIC property. Plaintiffs also stress that this is not a "sweetheart" deal for Declarant because out of the ten available spaces that are managed by the PMA, Declarant owns five of them; thus, four parking spaces are in dispute. Therefore, Plaintiffs assert that these four parking spaces do not provide Declarant with a bundle of cash, and there are even points where these spaces are occupied and thus cannot be available for use by WHI Parking. Plaintiffs also state that although the Unit Owners argue that Declarant has failed to provide an accounting of the parking revenue, they have actually never requested the Special Master to authorize, conduct, and effectuate such an accounting.
Although this Court has found that the Unit Owners have no ownership rights in the abutting Bayside property, and that the PMA is voidable by the Unit Owners under § 34-36.1-3.05 of the Act, there are still genuine issues of material fact that govern the issue of whether the Unit Owners are entitled to an accounting and pro rata share of the commercial use of the WHIC parking spaces. Specifically, the genuine issues of material fact that remain are (1) whether the parking spaces on the WHIC property are limited common elements or common elements; (2) whether two parking spaces were granted to the Unit Owners on the WHIC property; and (3) as determined below, whether Declarant has interfered with the Cross Easement by refusing access to affiliates of the Unit Owners and by installing planters on the BSA easement. Because these issues also go to the crux of the Unit Owners' request for an accounting and pro rata share of Declarant and Catalano's commercial use of the WHIC parking spaces, as well as whether Declarant violated the terms of the Public Offering Statement and First Amended Declaration by eliminating parking spaces on the WHIC property, this Court denies the Unit Owners' request for summary judgment on these issues.
F
Whether Declarant Is Violating the Unit Owners' Cross Easement Rights
According to the Unit Owners, Declarant is violating the Cross Easement in at least two ways: (1) the security gate that Declarant has erected on the Bayside property restricts the Unit Owners' use of the right-of-way pursuant to the Easement; and (2) the large planters that Declarant has placed on the WHICA common elements blocks parking spaces and interferes with traffic flow. With respect to the first issue, the Unit Owners allege that with the security gate in place, Declarant and/or its affiliates have denied access to individuals associated with the Unit Owners, thus inhibiting their use of the Cross Easement.
Regarding the second issue, the Unit Owners claim that the installation of the planters violates Paragraph 6 of the Cross Easement, which states that "WHI and [Bayside] hereby agree that neither party will park vehicles in or otherwise obstruct in any way the common driveway nor will they use or permit to be used said driveway in any way which will hinder the other party's use of said driveway." Unit Owners' Mot., Ex. B. Specifically, the Unit Owners note the Ocean House vehicles make daily trips to the WHIC property to clean Bayside and certain WHIC units; they also transport guests and set up for the daily cocktail hour at Bayside. The vehicles on the property consistently create difficulties with traffic flow and parking, which would be remedied, according to the Unit Owners, if the planters were removed. The Unit Owners also assert that the planters violate § 7.1(d) of the First Amended Declaration, which states that "[a] Unit Owner may not obstruct the Common Elements in any way without the prior written consent of the Executive Board . . . ." WHI's Mot. for Summ. J. (June 2, 2017), Ex. 7, § 7.1(d). To the Unit Owners, it is undisputed that Declarant never obtained or even requested the requisite written consent to place the planters on WHICA's common elements. Even if consent were provided, however, the Unit Owners argue that such consent may be withdrawn "in the sole and absolute discretion of the Executive Board." Id. Accordingly, the Unit Owners aver it is within the Executive Board's powers to remove obstacles placed without permission on the WHICA's common elements, especially those obstacles that violate the provisions of the First Amended Declaration.
In response, Plaintiffs argue that there has been no obstruction of the Cross Easement by way of the planters or the security gate. In support of this argument, Plaintiffs point to the fact that the security gate is on the Bayside property and that no Unit Owner has ever been denied access, and if they so wish to enter the Bayside property, they need only request a "security fob" to enter the gate. Catalano Aff. ¶ 52, Oct. 26, 2017. The security gate is also monitored by security cameras as paid for by WHI Parking. Id. Plaintiffs also assert that this is not an issue to be decided by this Court but by the Executive Board or all of the Unit Owners at their annual, regular, or special meeting of the WHICA. Plaintiffs also point out that the planters are on the BSA easement and thus are located on property that is controlled by the BSA. Furthermore, Plaintiffs contend that the purpose of the planters is to distinguish between the driveway and the pedestrian foot traffic and to act as a barrier between the vehicles and the foot traffic.
With respect to the security gate, this Court finds that the Unit Owners should not be denied access to the WHIC property so long as they request a security fob to enter the security gate. Plaintiffs have consented that the Unit Owners need only request a security fob and they will be allowed access onto the WHIC property to then access-what has only been determined by this Court at this point-their one assigned parking space. However, there is insufficient evidence at this time for this Court to determine, as a matter of law, whether affiliates of the Unit Owners should be granted access through the security gate via the Cross Easement, and whether the planters violate the Cross Easement and § 7.1(d) of the First Amended Declaration. Instead, these are two disputed genuine issues of material fact that should be determined at trial.
As determined above, whether the Unit Owners are also assigned a second parking space on the WHIC property is a genuine issue of material fact and cannot be determined as a matter of law at this time.
G
Whether Declarant Misappropriated Common Elements
The Unit Owners next argue that Declarant has misappropriated common elements to further enrich itself at the expense of the WHICA and the Unit Owners. Specifically, the Unit Owners note Declarant has allowed the Ocean House to place a bicycle rack equipped with bicycles exclusively for Ocean House guests' use on WHIC property. In citing to § 7.1(d) of the First Amended Declaration, the Unit Owners argue that common elements may not be used by a unit owner, and certainly not a third party, without permission from the Executive Board. The Unit Owners claim that no such permission was given by the Executive Board, and thus the bicycle racks must be removed immediately.
The Unit Owners also argue that Declarant has further misappropriated the WHICA's common elements by usurping a storage area and decks. Such common elements, according to the Unit Owners, must be under the control of the Association and Executive Board, by and through the Special Master. The Unit Owners allege that it would be in their best interests to have additional personal storage and/or in the best interest of the WHICA to have an area for the new property manager to keep his required items.
Section 7.1(d) of the Amended Declaration states: "[a] Unit Owner may not obstruct the Common Elements in any way without the prior written consent of the Executive Board, which consent may be given, withheld, qualified or withdrawn in the sole and absolute discretion of the Executive Board." Pls.' Mot for Summ. J. (June 2, 2017), Ex. 7, § 7.1(d). Based on the facts before this Court, this Court concludes as a matter of law that Declarant has violated § 7.1(d) of the Amended Declaration. See Mardo, 140 A.3d at 113-14. Specifically, this Court finds Declarant violated this section when bicycle racks were installed on the common elements of the WHIC property, exclusively for Ocean House guests' use, without obtaining permission of the Unit Owners. Additionally, Declarant also violated § 7.1(d) of the Amended Declaration by co-opting common elements including decks and storage areas for their own use and to the exclusion of the Unit Owners without their permission. See Unit Owners' Affs. ¶¶ 16-17; Unit Owners' Mot., Ex. K. This Court therefore declares that the bicycle racks must be removed immediately from the WHIC property and the relevant storage area and decks are under the exclusive control of the Association and Executive Board.
H
Whether Catalano, in His Individual Capacity, Should Be Dismissed as a Third-Party Defendant
Lastly, Plaintiffs contend that Catalano is not Declarant, nor is he a shareholder of Declarant, and therefore should not be sued in his individual capacity. Specifically, the First Amended Declaration states that the Executive Board and its members in their capacities as members, officers, and employees shall not be personally liable for torts, but will be personally liable for any willful misconduct or gross negligence. WHI's Mot. for Summary J. (June 2, 2017), Ex. 7, § 9.1. Furthermore, according to Plaintiffs, Catalano and Declarant are not one in the same; instead, (1) Catalano has no ownership interest in WHI; (2) the Executive Board has annually elected Catalano to the Executive Board and as its President; (3) WHICA has had the benefit of legal counsel, Marc Gerstacov, as well as the ability to obtain their own legal counsel, which the Unit Owners did in 2010; and (4) WHICA has had duly noticed annual meetings since December 2006. From these facts, Plaintiffs argue that the Unit Owners have the burden to prove their allegations of ultra vires and alter ego, and they have failed to present any evidence to substantiate any claims against Catalano individually.
In response, the Unit Owners argue that personal liability arises due to the fiduciary duty owed by Catalano while personally acting as Declarant's appointee to the condominium board, as the alter ego of WHI, and through his individual ultra vires actions. Although the Unit Owners concede that Catalano is not the "owner" of WHI, they contend that he nonetheless held himself out as such because (1) he is an officer of WHI and his wife is the sole shareholder of WHI, thus giving Catalano complete control over Declarant; (2) Catalano, who has been president of the Executive Board since 2007, has violated his fiduciary duty to prevent self-dealing as well as his duty of good faith and fair dealing owed to the Unit Owners; and (3) it is Catalano as an individual that controls and benefits from the several affiliated organizations that have entered into ultra vires agreements impacting the WHICA. The Unit Owners conclude that Catalano's attempt to disguise his personal identity by putting ownership interests in his wife's name must not be countenanced, and his personal actions have interfered with the Unit Owners' property rights and contractual rights.
1
Alter Ego Theory
The Unit Owners assert that Catalano has operated as Declarant's alter ego. Under Rhode Island law, "[t]he alter ego doctrine permits creditors of a corporation to reach the assets of the individual or individuals that control the corporation." Heflin v. Koszela, 774 A.2d 25, 30 (R.I. 2001). To pursue a claim under this doctrine,
"'there must be a concurrence of two circumstances: (1) there must be such a unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist, viz., the corporation is, in fact, the alter ego of one or a few individuals; and (2) the observance of the corporate form would sanction a fraud, promote injustice, or an inequitable result would follow.'" Id. (quoting Transamerica Cash Reserve, Inc. v. Dixie Power and Water, Inc., 789 P.2d 24, 26 (Utah 1990)).
"The second prong of the alter ego test 'is addressed to the conscience of the court, and the circumstances under which it will be met will vary with each case.'" Id. (quoting Transamerica, 789 P.2d at 26). "However, to satisfy the second prong, 'it must be shown that the corporation itself played a role in the inequitable conduct at issue.'" Id. (quoting Transamerica, 789 P.2d at 26).
Here, this Court has ruled that although Catalano does not have an ownership interest in Declarant, Catalano nonetheless controls Declarant because he is an officer of Declarant, as interpreted under § 34-36.1-1.03(1) of the Act. See § 34-36.1-1.03(1). Furthermore, during minutes at Executive Board meetings, Catalano would refer to himself as Declarant. See, e.g., Unit Owners' Rep. Mem. in Supp. of Mot. for Partial Summ. J. (Unit Owners' Rep.), Ex. 6. However, there is insufficient evidence before this Court at this time to determine whether Catalano's control over Declarant is such that the "separate personalities of the corporation and the individual no longer exist." Heflin, 774 A.2d at 30 (finding genuine issue of material fact existed as to whether a propane business was the alter ego of a separately incorporated lumber and hardware company because both businesses shared an address, office space, telephone number, and secretary to perform administrative and clerical tasks). Therefore, Plaintiffs' motion for summary judgment with respect to whether Catalano should be sued individually is denied without prejudice.
2
Ultra Vires
As stated in the Act, "[t]he principles of law and equity, including the law of corporations . . . [and] principal and agent . . . supplement the provisions of this chapter, except to the extent inconsistent with this chapter." Sec. 34-36.1-1.08. The Act does not discuss ultra vires actions by Declarant or a representative of Declarant. Furthermore, there is no case law that has come to this Court's attention regarding whether an officer of a declarant acted ultra vires on behalf of the declarant. See Poliakoff, Law of Condominium Operations § 4:48 (2017 ed.) ("Although the concept is implicit in numerous court opinions where the association or board's authority to act was considered, the term 'ultra vires' is rarely used in condominium cases."). Therefore, this Court considers other principles of law in analyzing this issue. See § 34-36.1-1.08.
"A corporation may exercise only those powers that are granted to it by law, by its charter or articles of incorporation, and by any bylaws made pursuant to the laws or charter; acts beyond the scope of the power granted are ultra vires." Jones, 7A Fletcher Cyclopedia of the Law of Corporations § 3399 (2014 ed.). Under Rhode Island law, however, "'[n]o act of a corporation . . . is invalid because the corporation was without capacity or power to do the act . . . .'" U.S. v. Fairway Capital Corp., 433 F.Supp.2d 226, 236 (D.R.I. 2006) (quoting G.L. 1956 § 7-1.2-303). "A corporation's lack of capacity or power to perform an act can only be asserted in a proceeding by a shareholder, the corporation itself, a receiver, trustee, other legal representative, or the Rhode Island attorney general." Id. (quoting § 7-1.2-303). The Unit Owners are not shareholders, the Declarant itself, a receiver, trustee, or other legal representative of Declarant. See § 7-1.2-303. Therefore, the Unit Owners do not have standing to assert that Declarant has committed ultra vires acts.
The Unit Owners also raise the argument that Catalano, individually acting as Declarant, committed ultra vires acts. However, whether an act committed by an officer or director of a corporation is a question pertaining to agency law, and not to the narrow interpretation of ultra vires acts. See Jones, 7A Fletcher Cyclopedia of the Law of Corporations § 3401. The rules governing the scope of an agent's authority, while applying to the agents of a private individual, also apply to the agents and officers of a corporation. Durfee & Canning v. Canning, 78 R.I. 385, 389, 82 A.2d 615, 617 (1951) (citing De Pasquale v. Societa De M. S. Maria, 54 R.I. 399, 399, 173 A. 623, 624 (1934)).
"'[T]he existence and scope of an agency relationship is essentially a factual determination.'" Calenda v. Allstate Ins. Co., 518 A.2d 624, 628 (R.I. 1986) (quoting Petrone v. Davis, 118 R.I. 261, 266, 373 A.2d 485, 487 (1977)) (finding the evidence in that case raised a question about the extent of agent's authority to bind principal, an insurance company, and that case therefore should have been submitted to the jury). Here, this Court notes that Catalano is not the owner of WHI. However, this Court has already determined that Catalano is an officer of WHI-and therefore controls Declarant-as interpreted under the Act. See § 34-36.1-1.03(1). Thus, the scope of his agency to Declarant and whether he acted beyond that scope is a factual determination. See Calenda, 518 A.2d at 628. Furthermore, there is insufficient evidence at this time for this Court to determine whether Catalano breached his fiduciary duty as the President of the Executive Board. As this Court already ruled, there is a genuine issue of material fact regarding whether Catalano, through his affiliated entities including WHI Parking, usurped business opportunities from the Unit Owners for his own personal gain and enrichment under § 34-36.1-3.14 of the Act. Additionally, there is a dispute regarding whether Catalano, acting through Declarant, violated the Unit Owners' rights under the Cross Easement and Amended Declaration, as well as whether he misappropriated common elements. For these reasons, this Court denies Plaintiffs' request for summary judgment regarding whether Catalano should be an individual defendant in this litigation without prejudice.
IV
Conclusion
For the foregoing reasons, this Court declares the following: (1) the Cross Easement does not grant the Unit Owners or anyone affiliated with the Unit Owners the right to park on the Bayside property; (2) the 2016 Commercial Parking Certificate does not give WHI Parking the right to use the parking spaces on the WHIC property; (3) the WHIC property may not be used by anyone for commercial parking purposes without the permission of the WHICA; (4) anyone who wishes to use the WHIC property for commercial purposes must file an application for a commercial parking certificate with the Town of Westerly; (5) the Unit Owners are each assigned one parking space on the WHIC property; (6) § 34-36.1-1.06 of the Act makes it a requirement for condominium associations to abide by local zoning ordinances; (7) § 260-77(A)(1) of the Westerly Zoning Ordinances requires two parking spaces for each residential unit; (8) the PMA is a management contract identified under § 34-36.1-3.05 of the Act that can be terminated by the WHICA; (9) when the Unit Owners vote to determine whether the PMA should be void, Declarant and any affiliate of Declarant are excluded from partaking in the vote; (10) Declarant, as a majority owner, owes a fiduciary duty to keep the minority Unit Owners informed; (11) the Unit Owners must not be denied access to the WHIC property so long as they request a security fob to enter the security gate; and (12) the bicycle racks must be removed immediately from the WHIC property, and the relevant storage area and decks are under the exclusive control of the Association and Executive Board. This Court also finds that there is a genuine issue of material fact with respect to the following: (1) whether the parking spaces on the WHIC property were limited common elements; (2) whether the Unit Owners are assigned a second parking space on the WHIC property; (3) whether the PMA is unconscionable or commercially unreasonable; (4) whether Declarant owed a fiduciary duty in its capacity as an officer on the Executive Board; (5) whether the Unit Owners are entitled to an accounting and pro rata share of the commercial use of the WHIC parking spaces; (6) whether affiliates of the Unit Owners should be granted access through the security gate via the Cross Easement and whether the planters violate the Cross Easement and § 7.1(d) of the First Amended Declaration; and (7) whether Catalano can be sued as an individual Defendant. Accordingly, the Unit Owners' motion for partial summary judgment is granted in part and denied in part, and Plaintiffs' cross motion for summary judgment is granted with respect to the Cross Easement being valid and binding on the WHIC and Bayside properties and denied as to the remaining claims. Counsel shall present the appropriate order for entry.