Opinion
No. C3-00-2202.
Filed June 26, 2001.
Appeal from the District Court, Washington County, File No. C8001249.
David J. McGee, (for appellant)
Keith S. Moheban, (for respondent)
Considered and decided by Klaphake, Presiding Judge, Stoneburner, Judge, and Poritsky, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant challenges the trial court's grant of summary judgment in favor of respondent. Because respondent asserted valid defenses, we affirm.
FACTS
In 1972, respondent developer Dreyfus Interstate Development Corporation (Dreyfus) undertook a plan to build 336 condominium units in various stages and created appellant Raintree Homeowners' Association (Raintree) to manage the units. Dreyfus developed 40 units in section number one, which is the section at issue in this case. In the declaration of apartment ownership for that section, each individual owner was obligated to pay 1/336th of the common-area assessments, and Dreyfus was to pay the share of assessments for the undeveloped units. The declaration also provided that Raintree would annually calculate the assessments for each owner and would send written notice of the amount due. The declaration further provided that unpaid assessments would automatically be a lien on the property.
By 1980, after building only 172 units, Dreyfus decided it would not build any more. It sent a letter to Raintree explaining that the project was finished and Raintree now should divide the assessments among the 172 units. Raintree thought Dreyfus should still pay a fraction of the assessments for the undeveloped property; accordingly it filed a lien and sent a notice of assessment lien to Dreyfus in July 1981. Thereafter, Raintree did not send any notice of assessments to Dreyfus.
In January 2000, Raintree sued Dreyfus for unpaid assessments for 1981-2000, plus interest. The complaint alleged breach of contract and breach of fiduciary duties, and sought (1) a judgment for unpaid assessments and interest, (2) attorney fees, and (3) a declaratory judgment. Dreyfus answered, denying it was subject to Raintree's assessments in the first instance and pleading ten affirmative defenses: statute of limitations, failure to state a claim, failure to join a necessary party, laches, estoppel, waiver, repudiation, no good-faith basis to assert the claim, insufficient service of process, and standing. Both parties moved for summary judgment, and the trial court granted summary judgment to Dreyfus.
DECISION
This court will affirm a grant of summary judgment "if it can be sustained on any ground." Winkler v. Magnuson, 539 N.W.2d 821, 828 (Minn.App. 1995) (citations omitted), review denied (Minn. Feb. 13, 1996). Although Dreyfus denies it was subject to liability for Raintree's assessments, it is not necessary for us to decide the issue of initial liability because Dreyfus raises three valid defenses.
1. Lack of Notice
We conclude that Dreyfus has an absolute defense to any assessments that may have arisen after 1981 because Raintree failed to give Dreyfus the required notice. This court will "hold condominium associations answerable to their bylaws and declarations" and refuse to hold someone liable for assessments if the association fails to follow the provisions of the declaration and bylaws requiring notice and an opportunity to be heard. Southview Greens Condo. Ass'n v. Finley, 413 N.W.2d 554, 557 (Minn.App. 1987).
Several of the documents governing the relationship between the parties require that Raintree send written notice of assessments annually to Dreyfus. The declaration of covenants, conditions, restrictions, and easements for Raintree Homeowners' Association provides that Raintree, "[b]y November 30 of each year * * * shall fix the amount of annual assessment * * * and shall send written notice thereof to each Owner." Raintree's bylaws require the board of directors "to send written notice of each assessment to every apartment owner and, where appropriate, to the Grantor." The declaration of apartment ownership also requires that Raintree determine the amount, if any, to assess each owner for common-area expenses. We conclude that these documents impose upon Raintree a requirement to give to each owner, including Dreyfus, an annual notice as a prerequisite for making an assessment.
Not only does the plain language of the above documents require notice, but such a requirement is also a matter of fairness to Dreyfus. Failure to send the required notice deprived Dreyfus of the opportunity to challenge the assessments, as well as the opportunity to take any other course of action that it might have done, such as develop and sell the remaining land, or simply sell it to another developer. Finally, as a practical matter, notice is required because the amount of the assessment changes from year to year, and without notice the owner would not know how much to pay. Because it is undisputed that after 1981 Raintree did not send Dreyfus any notice of assessment, we conclude that Raintree's failure to send the required notice gives Dreyfus an absolute defense to all assessments, except those for 1981.
2. Statute of Limitations/Laches
As to the 1981 assessment, we conclude that Raintree is barred by the condominium act's statute of limitations, or alternatively by the doctrine of laches.
The condominium act contains a three-year statute of limitations for assessments. Minn. Stat. § 515A.3-115(d) (2000). The declaration of apartment ownership filed by Dreyfus meets all the requirements for subjecting the property to the condominium act. See Minn. Stat. §§ 515.03, 515.11 (1972). In this document, Dreyfus stated that the declaration was made "pursuant to the provisions of the Minnesota Condominium Act * * * Chapter 515 of Minnesota Statutes 1971, (hereinafter referred to as the `Act')" and provided that "[t]he owners of condominium apartments covenant and agree that the administration of the condominium regime shall be in accordance with the provisions of the Act." Dreyfus owned all the units in section one when it declared the property subject to the act, and no valid action has ever been taken to remove the development from the ambit of the act. Thus, we conclude that the act's three-year statute of limitations bars Raintree's claim for the 1981 assessment. See Minn. Stat. §§ 515A.1-102(a), 515A.3-115(d) (2000).
Alternatively, if the development is not governed by the condominium act and the act's statute of limitations were not to apply, Raintree's claim for the 1981 assessment is barred by laches. To prove laches, Dreyfus must show (1) unreasonable delay and (2) prejudice. Harr v. City of Edina, 541 N.W.2d 603, 606 (Minn.App. 1996). The longer the delay, the less proof of prejudice is required. Goodman v. McDonnell Douglas Corp., 606 F.2d 800, 807 (8th Cir. 1979). First, we find 20 years to be an unreasonable delay. Second, we find that Dreyfus has shown prejudice because it could have taken steps to prevent the accumulation of damages. Dreyfus could have amended the declaration to remove the undeveloped property from the declaration, developed the property, or challenged any assessments that may have been assessed improperly. Raintree's unreasonable delay has prejudiced Dreyfus, and it would be inequitable to allow Raintree to recover assessments from Dreyfus. We conclude, therefore, that if the condominium act's statute of limitations does not apply, Raintree's claim for the 1981 assessments is barred by laches.
Because we conclude that Dreyfus has three defenses that bar Raintree's claim in its entirety, we need not discuss the other defenses.