Opinion
No. 52283-3-I.
Filed: March 8, 2004. UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No: 02-2-19922-4. Judgment or order under review. Date filed: 04/11/2003. Judge signing: Hon. Jay V White.
Counsel for Appellant(s), Brandi Lane Adams, Demco Law Firm PS, 5224 Wilson Ave S Ste 200, Seattle, WA 98118-2564.
John W. Demco, Demco Law Firm PS, 5224 Wilson Ave S Ste 200, Seattle, WA 98118-2564.
Counsel for Respondent(s), Greg W. Haffner, Curran Mendoza PS, 555 W Smith St, PO Box 140, Kent, WA 98035-0140.
Joyce Hardy appeals the order granting the Fairwood Greens Homeowners' Association's motion for summary judgment. She contends the trial court erred when it concluded that Fairwood did not exceed its authority under its governing documents or the Homeowners' Association Act, Chapter 64.38 RCW. Fairwood contends the merits of the appeal should not be considered because Hardy failed to comply with RAP 10.3(a)(3). Fairwood also argues that Hardy's challenges to the amended bylaws are time barred under RCW 4.16.080(2).
We conclude that Hardy did not violate RAP 10.3(a)(3), but that Hardy's challenges to the amended bylaws are beyond the governing three year statute of limitations. We further conclude that the trial court properly granted Fairwood's motion for summary judgment with one exception. We affirm in part and reverse in part.
In 1992, Fairwood membership voted to amend the original 1967 bylaws. In 1996, Hardy purchased property in the covenant neighborhood of Fairwood Park/Greens. The original 1967 bylaws were recorded with the title to Hardy's property at the time of purchase. Fairwood recorded the 1992 bylaw amendments in September 1997. In April 2002, Fairwood enacted rules governing recreational and other vehicles and aesthetics, including a provision for the assessment of fees for violations. In response to these new rules and regulations, Hardy filed a complaint for declaratory and injunctive relief. Both Hardy and Fairwood moved for summary judgment. The trial court granted Fairwood's motion.
Hardy appeals.
RAP 10.3(a)(3)
Fairwood argues that this panel should not consider the merits of Hardy's appeal because she failed to assign error to the orders of the trial court. We disagree.
RAP 10.3(a)(3) requires that an appellant state concisely each error that it claims the trial court made, along with the legal issue or issues pertaining to each alleged error. But RAP 1.2(a) calls for a liberal interpretation of the RAPs 'to promote justice and facilitate the decision of cases on the merits. Cases and issues will not be determined on the basis of compliance or noncompliance with these rules except in compelling circumstances where justice demands. . . .' Where the nature of the appeal is clear and the issues are apparent, so that the court is not inconvenienced and the respondent is not prejudiced, there is no compelling reason not to consider the merits of the case. Such is the case here. Furthermore, Fairwood does not contend that it has been prejudiced in any way. Accordingly, we reach the merits of this appeal.
Viereck v. Fibreboard Corp., 81 Wn. App. 579, 582-83, 915 P.2d 581, review denied, 130 Wn.2d 1009 (1996) (citing State v. Olson, 126 Wn.2d 315, 321, 893 P.2d 629 (1995)).
STATUTE OF LIMITATIONS
Fairwood contends that Hardy's challenges to the amended bylaws are barred under RCW 4.16.080(2), which imposes a three-year statute of limitations on claims of this nature. We agree.
'Within three years: (2) for any other injury to the person or rights of another not hereinafter enumerated'.
Fairwood argues that Hardy had constructive notice of the amended bylaws when they were recorded in 1997. The purpose of recording such documents is to provide notice. Hardy's written response to this argument is that she is challenging only the rules and regulations enacted pursuant to the amended bylaws, and not the bylaws themselves. Her briefing belies this assertion. Moreover, at oral argument, she appears to have properly conceded that the statute operates to bar her claim to the extent of her challenge to the amended bylaws. In any event, she has not provided any argument why the statute does not bar this claim. We conclude that Hardy's challenges to the 1992 amended bylaws, which were recorded in 1997, are barred by RCW 4.16.080(2).
Strong v. Clark, 56 Wn.2d 230, 232, 352 P.2d 183 (1960) ('When the facts upon which the fraud is predicated are contained in a written instrument which is placed on the public record, there is constructive notice of its contents, and the statute of limitations begins to run at the date of the recording of the instrument.').
WASHINGTON REAL PROPERTY DESKBOOK, sec. 34.4(4) at 34-8 (1996) ('A properly recorded instrument supplies constructive notice of the rights created by the instrument and of the recitals in the instrument.').
GOVERNING DOCUMENTS
Hardy argues that the trial court erred when it granted Fairwood's motion for summary judgment because Fairwood did not have the authority to enact the 2002 rules and regulations, and they conflict with the governing documents. We conclude that summary judgment was proper, with one exception.
We may affirm an order granting summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. We review questions of law de novo. The purpose of contract interpretation is to ascertain the parties' intent. A contract provision is ambiguous when it is capable of more than one meaning. The interpretation of the language in restrictive covenants is a question of law that is reviewed de novo. The primary objective is to determine the intent of the parties to the agreement.
Mains Farm Homeowners Ass'n v. Worthington, 121 Wn.2d 810, 813, 854 P.2d 1072 (1993).
Shafer v. Board of Trustees of Sandy Hook Yacht Club Estates, Inc., 76 Wn. App. 267, 275, 883 P.2d 1387 (1994), review denied, 127 Wn.2d 1003 (1995) (citing Berg v. Hudesman, 115 Wn.2d 657, 663, 801 P.2d 222 (1990)).
Shafer, 76 Wn. App. at 275.
Parry v. Hewitt, 68 Wn. App. 664, 668, 847 P.2d 483 (1992).
Parry, 68 Wn. App. at 668 (citing Burton v. Douglas County, 65 Wn.2d 619, 621, 399 P.2d 68 (1965)).
Hardy contends that Fairwood exceeded the authority granted to it in its declaration when it adopted the amended bylaws and created rules concerning recreational and other vehicles and aesthetics in 2002. Hardy contends that Fairwood improperly relied on the broad grant of authority in RCW 64.38.020, and failed to comply with the limiting language in the articles of incorporation.
RCW 64.38.020 states in pertinent part:
Unless otherwise provided in the governing documents, an association may:
(1) Adopt and amend bylaws, rules, and regulations;
(12) Exercise any other powers conferred by the bylaws;
(14) Exercise any other powers necessary and proper for the governance and operation of the association.
(Emphasis added.)
Hardy argues that the quoted language does not grant a homeowners' association broader powers than are contained in the governing documents. Hardy notes, however, '[t]he Homeowner's Association Act allows an Association to adopt and amend by-laws only if the Declaration does not address the issue.' She further argues that language in the articles that Fairwood is to 'perform all of the duties and obligations of the Association, as set forth in that certain Declaration of Covenants, Conditions and Restrictions' is limiting language that 'otherwise provide[s]' and restricts Fairwood's powers. This argument is not persuasive.
The better argument is that made by Fairwood. RCW 64.38.020 authorizes it to adopt rules and regulations necessary for governance and that the language in the articles does not otherwise provide. Fairwood argues that when the governing documents are silent regarding a power provided by statute, this does not mean that the governing documents 'provide otherwise' or prohibit that statutory power.
Fairwood relies on Wise v. Harrington Grove Comm. Ass'n., Inc. 151 N.C. App. 344, 566 S.E.2d 499 (N.C.App. 2002), reversed by, 357 N.C. 396, 584 S.E.2d 731 (2003). The court in Wise I reasoned that the language in the Planned Community Act that the power to fine an association member is "[s]ubject to the provisions of the articles of incorporation or the declaration and the declarant's rights therein" meant that '[w]hile the Declaration does not expressly provide for the power to fine, the PCA provides that additional power. We find no language in the Articles of Incorporation or the Declaration that limits or restricts the Association's power to fine, which is granted by the PCA.' Wise I, 151 N.C. App. at 352. But this precise reasoning was overturned on review before the North Carolina Supreme Court in 2003. Wise II, 357 N.C. 396, 584 S.E.2d 731 (2003). That court concluded that '[i]nterpreted as a whole, this statute does not automatically grant the listed powers to all homeowners associations. Instead, it appears [the statute] merely allows the alteration of an association's declaration, articles of incorporation, and by-laws to permit the exercise of these powers by associations in existence prior to 1999.' Wise II, 357 N.C. at 403.
The language cited by Hardy in the articles is not limiting language but a general statement of the purpose and powers of the Association. Fairwood is to 'perform all of the duties and obligations of the Association as set forth in that certain Declaration of Covenants, Conditions and Restrictions' This language is not ambiguous. Hardy's contention that Fairwood can only perform those duties and obligations specifically recited in the declaration makes no sense. The articles state that the Association may 'have and exercise any and all powers, rights and privileges which a corporation organized under the Non-Profit Corporation Law of the State of Washington by law may now or hereafter have or exercise.' RCW 24.03.035(20) provides that a nonprofit corporation may 'have and exercise all powers necessary or convenient to effect [sic] any or all of the purposes for which the corporation is organized.' Hardy's contention that language in the articles limits Fairwood's ability to enact rules pursuant to RCW 64.38.020 is not persuasive.
Hardy contends that the reasoning in Shafer is persuasive here. Hardy's reliance on Shafer is misplaced.
In Shafer, this court concluded that 'an express reservation of power authorizing less than 100 percent of property owners within a subdivision to adopt new restrictions respecting the use of privately owned property is valid'.
Shafer, 76 Wn. App. at 273-74.
Hardy concludes that there was no similar, express reservation of power in Fairwood's governing documents and that Shafer compels the conclusion that the amended bylaws and rules and regulations are invalid. But Shafer does not require an express reservation of power as the only means by which an association is authorized to act, as Hardy contends. As discussed above, RCW 64.38.020(14) grants the power to adopt and amend bylaws, rules, and regulations and to '[e]xercise any other powers necessary and proper for the governance and operation of the association.'
Hardy also argues that Shorewood West Condominium Association v. Sadri is analogous to the present case. Sadri is inapposite.
140 Wn.2d 47, 992 P.2d 1008 (2000).
There, our supreme court held that the restriction on use that appeared in the association bylaws, which conflicted with the allowance of that use in the declaration, was not in accordance with the Horizontal Property Regimes Act, and that the association may not promulgate a restriction on leasing in a bylaw without first amending its declaration. The declaration allowed the leasing of units for any period over 30 days. The amended bylaws did not allow the leasing of any unit for any period of time. Sadri was governed by the Horizontal Property Regimes Act, which required that use restrictions be included in the declaration. The Homeowners' Association Act does not have a similar requirement. Furthermore, Hardy does not show that the rules and regulations conflict with the declaration. Thus the reasoning in Sadri is not applicable here.
Sadri, 140 Wn.2d at 49.
Sadri, 140 Wn.2d at 50.
Sadri, 140 Wn.2d at 50.
Sadri, 140 Wn.2d at 55.
Hardy also relies on Riss v. Angel. Riss does not address Hardy's challenge to the authority of Fairwood to enact rules when the governing documents are silent.
131 Wn.2d 612, 934 P.2d 669 (1997).
In Riss, members of the homeowners' association rejected the plaintiffs' building plans under a consent to construction clause in the association's restrictive covenants. Our supreme court concluded that an association could not impose restrictions more burdensome, or beyond the stated maximum or minimum criteria in the covenants. Here, there is simply no record of Hardy or anyone else applying to the governing body for permission and that body unreasonably exercising its power to deny permission.
Riss, 131 Wn.2d at 615.
Riss, 131 Wn.2d at 625-26.
Hardy also argues that the bylaws and 2002 rules amend the declaration, without the required approval of the owners. Hardy cites no authority for this contention and fails to brief this argument. We need not review an issue raised in passing or unsupported by authority or persuasive argument. We conclude that Fairwood could rely on the broad grant of authority in RCW 64.38.020 to support the adoption of rules and regulations. The major requirement in adopting such rules and regulations is that they must not be inconsistent with the governing documents. Thus, the focus of our inquiry is whether the rules conflict with the governing documents.
See State v. Johnson, 119 Wn.2d 167, 171, 829 P.2d 1082 (1992).
2002 Rules and Regulations
Hardy contends that the rules and regulations on aesthetics conflict with the declaration. But the substance of her argument is that there is simply no authority in the declaration for the enactment of rules on aesthetics. The rules on aesthetics regulate yard maintenance, home exterior maintenance, and holiday decorations. There are no contrary statements in the declaration; it is simply silent on these matters. The declaration only states that each homeowner must provide exterior maintenance on his or her lot. As discussed above, RCW 64.38.020(14) authorizes Fairwood to 'exercise any other powers necessary and proper for the governance and operation of the association.' There is nothing in the declaration that specifically or by necessary implication forbids Fairwood from adopting rules on aesthetics and there is no language that would indicate that the rules conflict with the declaration.
Furthermore, Hardy concedes that Fairwood has the authority to provide for the maintenance, preservation, and architectural control of the properties within the association, so long as the limits imposed by the governing documents are respected. Yet Hardy points to no limiting language in the governing documents. We conclude that the rules on aesthetics do not conflict with the declaration.
Hardy next argues that the rules and regulations on recreational vehicles are in conflict with the declaration because the declaration only prohibits vehicles in excess of 6,000 pounds to be parked on any residential lot, while the regulation prohibits all recreational vehicles, regardless of size. We agree that the regulation, as written, conflicts with the declaration.
Fairwood insists that there is nothing in the declaration that expressly prohibits the regulation of vehicles under 6,000 pounds. While this is true, it is equally true that its express regulation of vehicles over 6,000 pounds necessarily implies that vehicles below that weight are not regulated by the declaration. It is arguable that Hardy reasonably relied on this provision of the original declaration at the time she purchased her property. In short, this does at least create a genuine issue of material fact.
Fairwood's contention that the remaining portion of article IX, section 4 provides the authority to enact rules and regulations governing recreational vehicles under 6,000 pounds, while plausible, is not entirely persuasive. This provision states: 'nor shall anything be done on any residential lot which may be or may become an annoyance or nuisance to the neighborhood.' 'Annoyance' is not defined in any of the governing documents. Fairwood contends that the rules on recreational vehicles are to prevent annoyances and are consistent with the statement of purpose of 'enhancing and protecting the value, desirability, and attractiveness of the real property.' Notwithstanding this argument, the provision to which Fairwood cites fails to overcome the necessary implication of the declaration that vehicles below the 6,000 pound limit are not subject to the regulations. Because Fairwood is not entitled to judgment as a matter of law with respect to the conflict between the declaration and its rules, this portion of the summary judgment may not stand.
Hardy next contends that the rules regarding vehicles are in conflict with the declaration. The rules prohibit on any lot vehicles in a state of disrepair or vehicles in long-term storage, evidenced by expired license plates or covered by a tarp that make them inoperable as they stand. When a violation is reported, the homeowner will be notified in writing and, if the situation is not corrected 'in a timely manner,' fines will be assessed.
Hardy first contends that the declaration authorizes the regulation of vehicles over 6,000 pounds only and that the rules are invalid because they regulate vehicles less than 6,000 pounds. Hardy is mistaken. The last paragraph of article IX, section 4, prohibits 'any vehicle' in a state of disrepair, not just vehicles over 6,000 pounds.
Hardy also argues that the declaration allows such vehicles to remain parked for up to 48 hours while the rule states only that the violation must be corrected in 'a timely manner.' Hardy presents no argument or proof that Fairwood's determination of 'a timely manner' actually conflicts with the 48 hour standard articulated in the declaration.
Amended Bylaws
Hardy next argues that Fairwood failed to manage the association in accordance with certain amended bylaws. These arguments are not persuasive.
Hardy argues that Fairwood failed to manage the association in accordance with amended bylaw VIII(f) by allowing the president to also serve as secretary. She points to three flyers published by Fairwood that list Martin Ritchie as both president and secretary. Fairwood argues that the flyer was not an accurate reflection of Ritchie's official status and that his name was inserted under the secretary designation because Fairwood was without a secretary during that time. Ritchie was not elected as secretary and thus did not serve in two offices in contravention of bylaw VIII(f). Hardy fails to demonstrate any prejudice, and we conclude this argument provides no basis for relief.
Hardy also argues that Fairwood failed to comply with amended bylaw VI(a) requiring the creation of nominating committees for nominations to the Board. The bylaw states: '[n]omination to the Board shall be made by a Nominating Committee. Nominations may also be made from the floor at the Annual Meeting.' The creation of a nominating committee is not the only way to present nominations to the board in compliance with the bylaw. In fact, the minutes of the September 2002 meeting indicate that a nominating committee did nominate candidates for the Board. Furthermore, Hardy fails to demonstrate prejudice. She is not entitled to relief. Amended Bylaws Conflict with Declaration.
Finally, Hardy contends that certain amended bylaws conflict with the Declaration and are invalid. Hardy concedes for the purpose of this appeal that the membership properly voted on and approved the amendments to the bylaws. Because we have already concluded that Hardy's challenges to the amended by laws are not timely under RCW 4.16.080(2) we shall not address these claims any further.
HOMEOWNERS' ASSOCIATION ACT
Hardy maintains that Fairwood violated RCW 64.38.035(2) concerning requirements for executive meetings, RCW 64.38.045(2) concerning record requirements, and RCW 64.38.025 concerning the requirement to act with care and loyalty in the best interest of the association. We conclude that Hardy's arguments are not persuasive, she fails to show any harm or prejudice, and the trial court did not err in granting summary judgment.
Hardy contends that Fairwood violated the executive meeting requirements at the September 2002 meeting. RCW 64.38.035(2) requires the board to take a vote in open meeting authorizing a closed meeting for the resolution of specific enumerated issues. We conclude that this argument is not persuasive.
The minutes of the September 2002 meeting indicate that no vote in open meeting to convene a closed session occurred. Fairwood concedes that it did not follow the statutory procedures. But Hardy concedes that Fairwood followed the procedures for the December 2002 and January 2003 meetings. Furthermore, Hardy fails to allege any harm or prejudice arising from Fairwood's failure to comply with RCW 64.38.035(2) on this one occasion. Hardy is not entitled to relief.
Hardy next argues that Fairwood failed to comply with the record requirements articulated in RCW 64.38.045(2). We conclude that this argument is not persuasive.
RCW 64.38.045(2) states:
All records of the association, including the names and addresses of owners and other occupants of the lots, shall be available for examination by all owners on reasonable advance notice . . . The association shall not release the unlisted telephone number of any owner. The association may impose and collect a reasonable charge for copies and any reasonable costs incurred by the association in providing access to records.
Hardy relates that in 2001 she met resistance from Fairwood when she asked to review the association's records but that the matter was eventually resolved with Fairwood paying her legal fees. Hardy contends that Fairwood continues to make the record review process 'difficult,' but she does not allege any further violation of RCW 64.38.045(2). Rather, she complains that Fairwood published a letter suggesting that the governing documents be amended to exempt certain personal information, like financial records, from review by Fairwood members. Hardy insists that this would be a violation of RCW 64.38.045(2). But Hardy presents no evidence that RCW 64.38.045(2) was violated or that there has been any movement on the part of Fairwood to amend the governing documents as suggested. Hardy's argument is not persuasive.
RCW 64.38.025(1) and RCW 24.03.127
Finally, Hardy contends that Fairwood failed to act in the association's best interests by exposing the membership to legal liability by enacting rules that are in direct conflict with the declaration. We conclude that this argument is not persuasive.
RCW 64.38.025(1) provides '[i]n the performance of their duties, the officers and members of the board of directors shall exercise the degree of care and loyalty required of an officer or director of a corporation organized under chapter 24.03 RCW.' RCW 24.03.127 provides:
[a] director shall perform the duties of a director, including the duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner such director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.
Hardy points to the prior lawsuit Fairwood filed against her that cost Fairwood and the membership over $100,000. She also points to Fairwood's actions regarding her record request in 2001 that resulted in Fairwood's agreement to pay her legal fees. Hardy argues that Fairwood continues to expose the membership to legal liability by enacting rules and regulations that are in direct conflict with the declaration. While we conclude that summary judgment in favor of Fairwood was not proper as to the rules and regulations governing recreational vehicles under 6,000 pounds, this does not rise to the level of lack of due care contemplated by RCW 64.38.025(1) or RCW 24.03.127. Hardy is not entitled to relief.
ATTORNEY FEES
Fairwood argues that it is entitled to attorney fees on appeal under RAP 18.1 and RCW 64.38.050. Hardy contends that if this court does award fees, it should only be for that portion of the issues presented that deal directly with Hardy's challenge to Fairwood's compliance with RCW 64.38.035(2), .045(2) and .025(1). We conclude that Fairwood's request for fees should be granted because it substantially prevails.
RAP 18.1 allows this court to award fees if a statute allows it. Under RCW 64.38.050, '[a]ny violation of the provisions of this chapter entitles an aggrieved party to any remedy provided by law or in equity. The court, in an appropriate case, may award reasonable attorneys' fees to the prevailing party.' The general rule is that if neither party wholly prevails, 'then the determination of who is a prevailing party depends upon who is the substantially prevailing party, and this question depends upon the extent of the relief afforded the parties.'
Riss, 131 Wn.2d at 633-34 (citing Marassi v. Lau, 71 Wn. App. 912, 916, 859 P.2d 605 (1993)).
Fairwood is entitled to attorney fees as the substantially prevailing party. Hardy prevailed on only one of her numerous claims before this court. The only relief afforded Hardy was the denial of summary judgment in favor of Fairwood concerning one rule governing recreational vehicles less than 6,000 pounds.
Hardy argues that the reasoning in Nordstrom, Inc. v. Tampourlos and Schmidt v. Cornerstrone Investments, Inc. should be applied to this case to limit any award of fees to Fairwood. Hardy's argument is not convincing.
107 Wn.2d 735, 733 P.2d 208 (1987).
115 Wn.2d 148, 795 P.2d 1143 (1990).
In Nordstrom, our supreme court held that a recovery of attorney fees under the Consumer Protection Act could not include costs incurred in litigating breach of contract and property damage issues. The court concluded that it would be an unfair benefit to award attorney fees for aspects of the suit that 'had nothing to do with Consumer Protection Act violations.' Schmidt reaches the same conclusion, noting that 13 additional issues 'not related' to the CPA claim could not be the basis of a fee award under the CPA.
Nordstrom, 107 Wn.2d at 743-44.
Nordstrom, 107 Wn.2d at 744.
Schmidt, 115 Wn.2d at 170-71.
But Hardy's claim that only a few issues in this appeal are related to violations of the Homeowners' Association Act is inaccurate. Her primary challenge concerns the authority that RCW 64.38.020 grants Fairwood. The other issues raised by Hardy are inextricably linked. We conclude that an award of fees to Fairwood is appropriate and that the award should not be limited to time spent addressing only RCW 64.38.035(2), .045(2) and .025(1).
We affirm in part and reverse in part the order granting Fairwood's motion for summary judgment.
GROSSE and AGID, JJ., concur.