AMERICA CONDOMINIUM ASSOCIATION v. IDC, Inc.

• Decision Date: 23 March 2004
• Docket Number: No. 2001-469-Appeal.,2001-469-Appeal.
• Citation: 844 A.2d 117
• Parties: AMERICA CONDOMINIUM ASSOCIATION, INC., et al. v. IDC, INC., et al.
• Court: Rhode Island Supreme Court

844 A.2d 117

AMERICA CONDOMINIUM ASSOCIATION, INC., et al. v. IDC, INC., et al.

No. 2001-469-Appeal.

Supreme Court of Rhode Island.

March 23, 2004.

Michael B. DeFanti, Esq., Providence, for Plaintiff.

Daniel Goldberg, Esq., for Defendant.

Present: WILLIAMS, C.J., FLANDERS, GOLDBERG, FLAHERTY, and SUTTELL, JJ.

OPINION

FLAHERTY, Justice.

In these cross-appeals from partial summary judgment, we are called upon to interpret portions of G.L.1956 chapter 36.1 of title 34, entitled the Rhode Island Condominium Act. At issue is the status of certain condominium property on Goat Island in Newport, Rhode Island.

I Facts/Procedural History

The plaintiffs, America Condominium Association, Inc., Capella South Condominium Association, Inc., and Harbor Houses Condominium Association, Inc. (collectively, the plaintiffs), filed a seven-count complaint against the defendants, Island Development Corporation, Inc. (IDC, Inc.), IDC Properties, Inc. (IDC Properties), and their president, Thomas R. Roos (Roos) (collectively, the defendants), seeking both compensatory and exemplary damages as well as declaratory and equitable relief.¹ They maintained that the defendants had improperly extended their development rights on certain areas of common property within the condominium complex and that because these development rights actually had expired, title to the common property now vested in the plaintiffs in fee simple. The parties filed cross-motions for partial summary judgment. After a hearing on the motions, the hearing justice ruled in favor of the plaintiffs, precipitating the defendants' appeal.

Although plaintiffs prevailed on their partial summary judgment motion, they contend in their appeal that the subsequently entered judgment did not accurately reflect the hearing justice's bench decision. In addition to appealing the grant of plaintiffs' motion for partial summary judgment, defendants dispute plaintiffs' appellate contentions. This story begins on January 13, 1988, when Globe Manufacturing Co. (Globe), predecessor in interest of defendants, recorded a declaration of condominium designated as "Goat Island South — A Waterfront Condominium" (GIS Condominium) in the Land Evidence Records of the City of Newport.² The condominium area was situated on Goat Island and consisted of approximately twenty-three acres. Included within the legal description of the condominium area were six defined parcels. Three of the parcels contained existing residential buildings. They were: America Condominium (America), which contained a forty-six-unit apartment building, Capella South Condominium (Capella South), which contained an eighty-nine-unit apartment building, and Harbor Houses Condominium (Harbor Houses), which contained nineteen stand-alone waterfront homes. The other three parcels were undeveloped and consisted of: the "Individual Unit" (later designated as the West Development Unit), "Development Unit #1" (later designated as the South Development Unit), and "Development Unit #2" (later designated as the Reserved Area or the North Development Unit).³

On March 3, 1988, Globe and Goat Island South Condominium Association, Inc. (the master association) amended and restated the original declaration and entitled it the first amended and restated declaration of condominium.⁴ It was designated as the master declaration. In the master declaration, a distinction was made between master units, so-called, and sub-condominiums, so-called, and between their respective status and rights within the GIS Condominium. A master unit was defined as "a physical portion of the Goat Island South Condominium designated for separate ownership or occupancy or designated as a Sub-Condominium * * *." A sub-condominium was defined as "any Master Unit of the Goat Island South Condominium that is itself a condominium." Each sub-condominium had its own specific, individual, declaration of condominium.

"Master Common Elements" included utilities, recreational facilities, all storage areas, grounds, gardens, plantings, walkways, parking areas, and "all other property normally in common use by the Owners and Unit Owners, all areas of the Project that do not fall within a Master Unit itself and are not labeled as part of the Master Unit, and all areas and facilities designated as `common elements' in the [Condominium] Act." Common elements were defined in the master declaration as "Common Elements of a Sub-Condominium as defined in the Declaration of such Condominium."⁵

Section 3.2 of the master declaration provided that "[t]he land underlying each Master Unit is a Master Limited Common Element allocated to the exclusive use of such Master Unit subject to the easements and rights set forth herein." A master limited common element was defined as:

"that portion of the Master Common Elements appurtenant to or associated with or reserved for use by one or more but fewer than all Master Units, and intended for the exclusive use of such Master Units and which are identified as Master Limited Common Elements herein and/or in the Plats and Plans."

Thus, in essence, a master unit consisted of the airspace above a master limited common element, while the master limited common element itself consisted of the physical land beneath the master unit airspace.

The master declaration also defines two types of owners. An "Owner" is defined as "the Declarant or other person or persons owning a Master Unit, which Master Unit is not a Sub-Condominium * * *." A "Unit Owner" is defined as "the Declarant or other person or persons owning a Unit of a Sub-Condominium * * *[,]" where a unit is defined as "a physical portion of a Sub-Condominium designated for separate ownership or occupancy."

The master declaration says that the declarant reserved certain development rights in the original declaration,⁶ including the right to convert the land underlying America, Capella South, Harbor Houses and the West and South Development Units into master limited common elements with development rights in the above master unit airspace. It also reserved the right to convert Development Unit # 2, or the Reserved Area, into a master common element with reserved development rights to either further convert the area into a limited master common element, with an associated master unit owning the above airspace and development rights, or to completely withdraw the area from the GIS Condominium. On March 3, 1988, the declarant exercised its rights as allowed in the original declaration. Thus, the declarant converted the land underlying America, Capella South, Harbor Houses, the West and South Development Units into limited master common elements, and converted the Reserved Area into a master common element with reserved development rights in the master declaration.

Accordingly, the airspace above the limited master common elements became master units consisting:

"of the airspace above and all buildings and improvements now or hereafter located on the land * * *, but excluding said land itself. The lower boundary of such Master Unit is the upper surface of the land under the Master Unit. * * * There is no upper boundary."

Pursuant to the special declarant and development rights section of the master declaration, the declarant reserved certain rights to construct improvements until December 31, 1994.

Furthermore, under the master declaration, each master unit possessed a delineated, fixed percentage of the undivided ownership interest in the master common elements. Such master common elements would be controlled and maintained by a master association, which itself would be controlled by a master executive board consisting of representatives from each master unit. Thus, those representatives would act on behalf of, and make decisions for, the individual sub-condominium unit owners, or residents, at the master executive board meetings. Each sub-condominium also would have its own sub-association controlled by its individual sub-association executive board. These sub-associations would control and maintain the individual common areas exclusive to each sub-condominium. At the time of the master declaration, only America and Harbor Houses were considered to be sub-condominiums.⁷ The undeveloped West and South Development Units were wholly owned and controlled by the declarant.

The master declaration further provided that the percentage voting rights and financial obligations of each master unit was based upon its undivided, "master allocated interest" in the master common elements of the condominium scheme.⁸ The specific master allocated interest of each master unit was delineated in an attached exhibit to the master declaration as follows: (1) Harbor Houses — 21.42 percent; (2) America 19.25 — percent; (3) Capella South — 39.61 percent; (4) South Development Unit — 9.6 percent; and, (5) West Development Unit — 10.12 percent. The aforementioned percentages represented the relative voting rights that each master unit was entitled to east at a master association meeting. The exhibit also described the individual percentage master allocated interests of the individual units within America and Harbor houses. Significantly, however, votes at the master association meetings could be cast only by members of the master executive board.

After passage of the 1988 master declaration, Globe's interests were transferred to IDC, Inc., and thereafter to IDC Properties, through a series of sales and assignments.⁹ As successor declarant, IDC, Inc., and later IDC Properties, possessed all of the development rights in the undeveloped West Development and the South Development master units, as well as in the Reserved Area. By early 1994, the declarant had not yet exercised the development rights set forth in the master declaration. Realizing that the December 31, 1994 deadline to develop was fast approaching, it attempted to extend the deadline through a series of amendments to the master declaration. These...