Opinion
No. 1428 C.D. 2013
04-30-2014
Parkview Heights Homeowners Association v. Barry Levine, Appellant
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY SENIOR JUDGE COLINS
Barry Levine (Levine) appeals from the opinion and order of the Court of Common Pleas of Centre County (Trial Court), which found in favor of Parkview Heights Homeowners Association (the Association) and awarded full payment of unpaid annual assessments due from Levine for the years 2005 to 2012 ($75 per year, totaling $600), plus interest and attorney's fees and costs, for a total of $11,874.00.
As reflected in an exhibit to the June 5, 2013 Transcript of Proceedings (Civil Non-jury Trial) (Transcript), entitled "Attorney Fee Recap," the Association's counsel received $8,934.25 for services rendered between July 6, 2010 and November 28, 2012. (Exhibit P "9," Reproduced Record (R.R.) at 479a.) Additional legal fees of $630.00 from 2007, fees of $740.00 for preparation for a June 5, 2013 hearing, and interest charges of $969.75 were also assessed against Levine. (Exhibit P "10," R.R. at 536a.)
Since 2000, Levine has been a resident and owner of Lot No. 2 of phase I of the Parkview Heights Estates planned community development of single-family homes. The community was developed in 1999 by Parkview Heights Associates, from which the Association assumed control in July, 2006. Levine was assessed, and paid, annual association dues of $75.00 until 2003. In 2010, the Association filed a complaint against Levine to collect unpaid annual assessments for the years 2005 to 2009. In 2012, the Association filed a motion to amend the complaint to include unpaid annual assessments for the years 2010 to 2012. After a non-jury trial on June 5, 2013, the Trial Court entered its opinion and order dated July 23, 2013 and this appeal followed.
Levine testified that he did not pay the 2004 assessment payable to Parkview Heights Associates; however, the complaint filed by the Association sought annual assessments beginning with 2005. (Transcript, R.R. at 404a-405a.)
Our scope of review on appeal is limited to determining whether the trial court committed an error of law, "a question over which we exercise plenary review." Locust Lake Village Property Owners Association v. Wengerd, 899 A.2d 1193, 1197 n.6 (Pa. Cmwlth. 2006).
Before this Court, Levine argues, first, that the Association failed to follow the assessment procedures mandated in its By-Laws. The Association's By-Laws authorize its Board of Directors (Board) to determine an assessment against each lot within the subdivision to provide for required maintenance. The Trial Court addressed Levine's argument that the Association did not strictly adhere to the requirements under Section 7.3 of its By-Laws, specifically, that more than ten days had passed between the date of determination of assessments by the Board and the date when notice of such assessment was sent to homeowners. The Trial Court acknowledged that the assessment notices may have gone out more than ten days after they had been established, but concluded that not so much time had passed as would render such notice prejudicial or ineffective against the homeowners, and stated that strict adherence to this requirement would allow those certain homeowners to obtain the benefits of the Association's services without paying for them. (Trial Court Opinion, R.R. at 343a.)
Pursuant to Section 30 of the Declaration of Restrictive Covenants, Reservations, and Easements, each lot owner is required to maintain membership in the Association and to be bound by all provisions of the By-Laws of the Association. (R.R. at 23a.)
Article VII, Section 7.3 of the Association's By-Laws governs assessments and states:
The Board of Directors shall at least annually determine an amount to be assessed against each lot in the Parkview Heights Estates Subdivision as shall be sufficient to provide the required maintenance of the detention basin. Notice of such assessment shall be provided to each affected lot owner within ten (10) days of the determination of the amount by the Board and shall be payable by each lot owner within forty-five (45) days of the date of the notice of assessment.(Association By-Laws, R.R. at 447a.)
At the non-jury trial, the President of the Association testified, and stated that the Association's $75.00 annual dues were first established by the developer, and have never been changed. (June 5, 2013 Transcript of Proceedings, R.R. at 372a.) The Association President testified further that assessments were made by the Board in every calendar year at issue, and that such assessments were made in the latter part of each year, typically in late November, and were typically sent out to homeowners in early January of the following calendar year. (Id., R.R. at 386a.) The reproduced record contains invoice notices sent to Levine for assessments for the years 2003 through 2008; Levine paid the 2003 assessment but did not pay the 2004 assessment (these invoice notices are dated January 24, 2003 and January 19, 2004 respectively). The unpaid invoice notices sent to Levine for the years 2005 through 2008 are dated January 10, 2005, January 13, 2006, January 2, 2007, and January 1, 2008. (Id., R.R. at 467a-473a.)
This Court has established that owners are obligated to pay a share of the costs of maintaining common areas managed by a homeowner's association because they are the beneficial users of the common areas of a development; owners are thus responsible for the cost of the repair, maintenance and upkeep of a development's roads, facilities and amenities. Hess v. Barton Gun Club, 718 A.2d 908, 912 (Pa. Cmwlth. 1998) (quoting Spinnler Point Colony Association, Inc. v. Nash, 689 A.2d 1026, 1029 (Pa. Cmwlth. 1997)). Our Court has cautioned that if we held otherwise, owners would be able to avoid their duty to pay assessments, associations would be powerless to operate, and facilities of a development would fall into disrepair. Hess, 718 A.2d at 912.
The Trial Court correctly rejected Levine's argument that the assessment was improper. The Trial Court found credible the testimony of the Association's President that the Board met regularly in all of the relevant years, and that a quorum was established at these meetings:
The testimony of [the Association's President] provided an explanation regarding how the Association followed protocol throughout its dealings with Levine and the assessments promulgated each year, as well as the notice given to unit owners...[the Association President] was able to fill in the gaps where the minutes of the meetings omitted...whether an annual assessment had passed...(Trial Court Opinion, R.R. at 346a.) We conclude that any breach the Association may have made with regard to a failure to issue assessment notices within ten days of the date they were determined is immaterial, especially here, where the $75.00 assessment amount was established by the developer over ten years ago, and has remained the same for every year since. Indeed, the By-Laws do not establish a consequence for the failure to issue an assessment notice within ten days of its determination; the By-Laws do, however, provide that if payment of the assessment is not made within forty-five days following the issuance of the notice, interest shall be applied at a specific rate, and they further mandate the institution of collection proceedings by the Board if the assessment is still unpaid six months after the due date.
Levine next argues that the Association violated the powers delineated in the By-Laws by seeking assessments to fund electric service to, and the maintenance and decoration of, a lighted sign located immediately beside a paved roadway at the entrance to the development. Levine maintains that these actions are beyond the scope of the powers conferred by the Association's By-Laws, which describe the property to be maintained as the "drainage ways" and the "detention basin" in the development. We disagree.
Under Article VII of the Association By-Laws, the Board is given the following relevant duties and/or powers:
Section 7.1. Maintenance of Association Property. The primary duty of the Board of Directors of the Association shall be ownership, maintenance and insurance of designated open spaces (drainage ways) as described on the attached Exhibit 'A.'(Emphasis supplied.) See also By-Laws Article VII, Section 7.3, n.5 supra.
Section 7.2. Contract for Services. The Board of Directors may enter into such contracts from time to time as it may deem necessary to own, maintain & insure the designated open space (drainage ways). The Board shall assure that the party contracted to provide such service shall be insured against liability for injury or damage resulting from such provider's activities in an amount deemed adequate by the Board. The Board shall not be authorized to employ any person as an employee of the Association.
Levine acknowledges that homeowners' associations across the country maintain signs located at development entrances, but argues that this duty is not reflected in the foundational documents of this Association. Here, the Association's By-Laws state that the Board's primary duty is to maintain and insure the open spaces (drainage ways); however, nowhere in the By-Laws is it stated that the Board's activities are limited to such maintenance. Pursuant to the Pennsylvania Uniform Planned Communities Act (Act), the Association is conveyed with broad powers, including the ability to regulate the maintenance and repair of common elements. 68 Pa. C.S. § 5302 (a)(6). Here, the illuminated sign at the entrance to the development was constructed by the developer, and from the time that the Association assumed control from the developer, it has maintained the development sign, as well as the common elements and drainage areas within the development. The Association meeting minutes and banking summaries reflect expenditures for business supplies, insurance, mowing costs, entrance sign electricity and repair, bond insurance, and taxes. (R.R. at 541a-634a.) The maintenance expenses for the entrance sign are modest, and consist of approximately $4.50/per month to illuminate the sign, payment of $105.11 in 2007 and $20.00 in 2008 for flowers to be planted around the sign, and miscellaneous sign repair/light bulb expenses, which totaled $139.54 in 2006, and $121.82 in 2008. (R.R. at 395a-397a.) The Association's President testified that the sign sits on an area at the entrance to the development immediately beside the roadway that is considered "green space." (R.R. at 382a.) The sign identifies the community as "Parkview Heights Estates" and inures to the benefit of all of the members of the Association. The By-Laws do not restrict the Association from maintaining the sign, and the Act clearly empowers the Association to do so.
The Trial Judge determined that the Board acted reasonably in maintaining the entrance sign, but noted that even if its actions had been unauthorized, neither the Act nor the Association's By-Laws authorized Levine to unilaterally stop paying assessments because he disagreed with the manner in which Association funds were being spent. (Opinion of the Trial Court at 4-5.)
Finally, Levine argues that the Association's By-Laws were effectively amended by a letter sent to Levine and all other homeowners by the developer in 2004 (prior to the time the Association assumed control from the developer), which indicated that the Homeowners' Association would be "holding a balance of $500 in the Association checking account at the end of each year." (R.R., Exhibit P-11 at 537a.) The letter further stated, "[w]hatever we have remaining will be assessed and divided between each homeowner in Parkview Heights. This will mean a decrease in your dues next year and thereafter... ." (Id.)
In January 2005, the developer notified all homeowners that the $500 balance had not been maintained, and there would be no decrease in dues for 2005. (R.R. at 538a.) --------
The Trial Court properly rejected Levine's contention that the developer thus altered or amended the By-Laws to prohibit the accumulation of reserves in excess of $500.00. We find no evidence whatsoever of any intent by the developer to amend the By-Laws. The developer was free to alter or amend the By-Laws up until the time a majority of the building lots were sold, and did not do so. Section 5302(a)(2) of the Act authorizes the Association to adopt and amend budgets for revenues, expenditures and reserves, and to collect assessments for common expenses, and Section 5313 of the Act establishes a protocol for surplus funds. 68 Pa.C.S. §§ 5302(a)(2), 5313. The Association's Annual Meeting minutes for July, 2008 include a Board discussion of its reserve fund, in response to concerns voiced by Levine, who attended the meeting:
[Levine] was under the mistaken impression that we were only allowed to have a $500.00 balance in our checkbook. It was explained that the funds are being built up for future maintenance issues, especially for the detention basins. Repairs could be in excess of $10,000 if stacks need to be replaced or for pipe cleaning. We
could either assess the owners at the time of the repair or have funds available for these emergencies. If the funds build up enough, the Board can decide to reduce or suspend the annual dues until such a time as they are needed again.(R.R. at 544a-545a.) The actions of the Association were reasonable and proper under the Act and pursuant to the By-Laws.
Accordingly, the finding of the Trial Court in favor of the Association, and its award of full payment of unpaid annual assessments due from Levine, plus interest and attorney's fees and costs, is affirmed.
/s/_________
JAMES GARDNER COLINS, Senior Judge ORDER
AND NOW, this 30th day of April, 2014, the order of the Centre County Court of Common Pleas in the above-captioned matter is hereby AFFIRMED.
/s/_________
JAMES GARDNER COLINS, Senior Judge