Accetta v. Brooks Towers Residences Condo. Ass'n, Inc.

• Decision Date: 01 July 2021
• Docket Number: Court of Appeals No. 19CA2076
• Citation: 496 P.3d 821,2021 COA 87
• Parties: Anthony T. ACCETTA and Nancy Accetta, Plaintiffs-Appellants, v. BROOKS TOWERS RESIDENCES CONDOMINIUM ASSOCIATION, INC., a Colorado nonprofit corporation; Mark Trenka, in his capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; Marla Grant, in her capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; Bill Clarke, in his capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; Clay Courter, in his capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; Robb Green, in his capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; and Joan Foster, in her capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc., Defendants-Appellees.
• Court: Colorado Court of Appeals

496 P.3d 821

2021 COA 87

Anthony T. ACCETTA and Nancy Accetta, Plaintiffs-Appellants,

v.BROOKS TOWERS RESIDENCES CONDOMINIUM ASSOCIATION, INC., a Colorado nonprofit corporation; Mark Trenka, in his capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; Marla Grant, in her capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; Bill Clarke, in his capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; Clay Courter, in his capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; Robb Green, in his capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc.; and Joan Foster, in her capacity as a member of the Board of Directors of the Brooks Towers Residences Condominium Association, Inc., Defendants-Appellees.

Court of Appeals No. 19CA2076

Colorado Court of Appeals, Division III.

Announced July 1, 2021

Foley & Mansfield, PLLP, Dustin J. Priebe, Englewood, Colorado; Podoll & Podoll, P.C., Robert C. Podoll, Greenwood Village, Colorado for Plaintiffs-Appellants

Nemirow Perez P.C., Ronald H. Nemirow, Miles Buckingham, Lakewood, Colorado, for Defendants-Appellees

Opinion by JUDGE GOMEZ

¶ 1 In this case, we are asked to resolve an issue of first impression under the Colorado Common Interest Ownership Act (CCIOA), sections 38-33.3-101 to - 401, C.R.S. 2020, which governs the creation and operation of common interest communities in the state.

¶ 2 Specifically, we consider whether section 38-33.3-118, C.R.S. 2020, provides the exclusive means for a common interest community association that existed prior to the effective date of CCIOA to elect to be governed by the entirety of CCIOA. We conclude that it does and, in doing so, reject the argument that such an election can be made simply by recording a new declaration that might be interpreted to adopt the provisions of CCIOA.

¶ 3 Therefore, we affirm the trial court's grant of summary judgment in favor of defendants, Brooks Towers Residences Condominium Association, Inc. (the Association) and its individual board members, on a declaratory judgment claim brought by two residents, Anthony T. Accetta and Nancy Accetta, under CCIOA. We also affirm the trial court's grant of summary judgment in favor of defendants on the Accettas’ common law claims. Finally, we conclude that defendants are entitled to recover their attorney fees for this appeal under section 38-33.3-123(1)(c), C.R.S. 2020, and we remand the case to the trial court to determine the amount of such fees and award them to defendants.

I. Background

¶ 4 Through their claims in this case, the Accettas challenge the allocation of common expenses among units in Brooks Towers, a high-rise condominium building in downtown Denver.

¶ 5 Magna Associates (Magna) acquired the building in the 1970s. At that time, it was a residential apartment building with a handful of commercial spaces.

¶ 6 In 1979, Magna recorded a declaration and map submitting the building to condominium ownership under the Condominium Ownership Act (COA), section 38-33-101 to - 113, C.R.S. 2020. The 1979 declaration named the community Brooks Towers Condominiums and divided the building into 518 units (514 residential and 4 commercial units). Magna didn't sell the units at that time but continued to rent them to tenants. Nor, it seems, did Magna create "The Brooks Towers Condominiums Association, Inc." referenced in the 1979 declaration.

¶ 7 In the early 1990s, Magna had to sell its assets and distribute its funds, as its formation documents required it to terminate on a certain date. To facilitate these tasks, Magna transitioned to the Magna Associates Liquidating Trust (the Trust), which remodeled the common spaces, converted some spaces into additional units, and sold all the units to third parties.

¶ 8 In 1995, before selling the units, the Trust, acting as the declarant, executed and recorded an "Amended and Restated Declaration" and an amended map. The 1995 declaration states that it "shall totally replace and supersede the [1979] declaration." Through the 1995 declaration, the Trust changed the community's name to Brooks Tower Residences, increased the number of units to 854 (526 residential, 33 commercial, and 295 parking units), and designated the Association (which had been created in 1994 under the new name, Brooks Tower Residences Condominium Association, Inc.) to manage the community.¹

¶ 9 The 1995 declaration makes several references to CCIOA, which had become effective on July 1, 1992. See Ch. 283, sec. 2, 1991 Colo. Sess. Laws 1757. For example, it

• provides that the "Declarant does hereby submit the Project to condominium ownership pursuant to [CCIOA]";

• states that "[t]he provisions of this Declaration shall be in addition and supplemental to [CCIOA] and to all other provisions of law"; and

• includes a section providing information about the property "in compliance with certain of the requirements set forth in Section 205 of [CCIOA]."

¶ 10 An attachment to the 1995 declaration specifies the allocations of undivided interests for each unit. The declaration explains that those percentages are based on the units’ relative values, as determined by the Trust as of the date of the declaration. The declaration also obligates unit owners to pay assessments, imposed by the Association against each unit in accordance with the unit's ownership percentage, to meet the common expenses.

¶ 11 The Accettas purchased Unit 3D in 2005. Under the 1995 declaration, Unit 3D's percentage of ownership in the common elements was less than 0.3 percent — less than some units but significantly higher than many others. As a result, the Accettas pay higher monthly dues and are assessed higher amounts for large projects than many other unit owners.

¶ 12 The special warranty deed that conveyed Unit 3D to the Accettas states that the unit is subject to the 1995 declaration. The Accettas maintain, however, that they didn't read the declaration before purchasing the unit, weren't provided a copy of the list of percentage interests or any other documentation showing the allocations for other units, and didn't learn of the differentials in unit allocations until several years later.

¶ 13 In 2017, after learning of those differentials, the Accettas filed this case. They sought a declaration that the 1995 declaration's allocation provisions are invalid under three provisions of CCIOA: (1) section 38-33.3-207(2), C.R.S. 2020, which requires a declaration to state the formulas used to establish allocations of interests; (2) section 38-33.3-112(1), C.R.S. 2020, which permits a court to refuse to enforce an unconscionable clause in a contract relating to a common interest community; and (3) section 38-33.3-113, C.R.S. 2020, which imposes an obligation of good faith in the performance of every contract or duty governed by CCIOA. They also brought common law claims for breach of fiduciary duty, conversion, unjust enrichment, and negligence.

¶ 14 Earlier in the case, the trial court ordered that all the other unit owners were indispensable parties who had to be joined in the case. The supreme court reviewed that order under C.A.R. 21 and concluded that joinder was not necessary.

Accetta v. Brooks Towers Residences Condo. Ass'n , 2019 CO 11, ¶ 3, 434 P.3d 600.²

¶ 15 Later, on cross-motions by the parties, the trial court issued three orders resolving the Accettas’ claims.

¶ 16 In the first order, the court issued a legal determination under C.R.C.P. 56(h) that Brooks Towers is not governed by the entirety of CCIOA. The court reasoned that the community was formed in 1979 under COA, there was never any election for treatment as a post-CCIOA community through the procedures outlined in section 38-33.3-118, and such an election couldn't be effectuated by other means, including by adopting and recording a new declaration.

¶ 17 In the second order, the court granted in part the individual defendants’ summary judgment motion, concluding that the Accettas could pursue their CCIOA declaratory judgment claim but not their common law claims against the individual defendants. As to the common law claims, the court reasoned that, under various provisions of law and the Association's governing documents, "none of the individually-named Defendants can be held liable in tort for any of the damage claims asserted against them."

¶ 18 In the third order, the court granted defendants’ motion for summary judgment and denied the Accettas’ cross-motion for summary judgment. The court concluded that the Accettas’ CCIOA declaratory judgment claim failed as a matter of law because the community isn't subject to the entirety of CCIOA or to the specific CCIOA provisions at issue, and, even if those provisions applied, the 1995 declaration didn't violate them. The court also concluded that the Accettas’ common law claims failed as a matter of law because defendants had no duty to adjust the allocations set by the 1995 declaration and the Accettas were on record notice of those allocations when they purchased their unit.

¶ 19 The Accettas challenge the first and third orders in this appeal but do not challenge the second order.

II. Analysis

¶ 20 The Accettas contend the trial court erred in three ways: (1) by concluding that Brooks Towers isn't governed by CCIOA; (2) by holding that the 1995 declaration doesn't violate certain provisions of CCIOA; and (3) by entering summary judgment in defendants’ favor on the Accettas’ common law claims.

¶ 21 We disagree with the Accettas on the first issue. Because we conclude that Brooks Towers isn't subject to the CCIOA provisions the Accettas claim the 1995 declaration violates, we don't address the second issue. We also disagree with the Accettas on the third issue. Finally, we consider the parties’ competing requests for...