Alessi v. Bowen Court Condo.

• Decision Date: 04 June 2012
• Docket Number: No. 2010–436–Appeal.,2010–436–Appeal.
• Parties: Joseph F. ALESSI v. BOWEN COURT CONDOMINIUM et al.
• Court: Rhode Island Supreme Court

44 A.3d 736

Joseph F. ALESSI

v.BOWEN COURT CONDOMINIUM et al.

No. 2010–436–Appeal.

Supreme Court of Rhode Island.

June 4, 2012.

Christopher A. Anderson, Esq., North Scituate, for Plaintiff.

Frank A. Lombardi, Esq., for Defendant.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, ROBINSON, and INDEGLIA, JJ.

OPINION

Justice GOLDBERG, for the Court.

This case came before the Supreme Court on April 4, 2012, on appeal from a grant of summary judgment in favor of the defendants, Bowen Court Condominium (condominium) and Janet O'Rourke, in her capacity as president of the condominium association (association), (collectively, defendants). On appeal, the plaintiff, Joseph F. Alessi (Alessi or plaintiff), argues that the trial justice erred in determining that the right to exclude withdrawable real estate from a condominium after a foreclosure expires when the declarant's right to withdraw the real estate otherwise would have expired. We affirm the judgment of the Superior Court.

Facts and Travel

Over twenty years after Rhode Island's infamous credit union crisis, this case causes us to examine property interests that were foreclosed upon by a fundamentally unstable credit union and then transferred to the Rhode Island Depositors Economic Protection Corporation (DEPCO) after the credit union collapsed. We begin by tracing the protracted history of the property interest at stake in this controversy. Bowen Court Associates (declarant) created the condominium by declaration dated January 10, 1989, and recorded the following day. The declarant conveyed to the condominium approximately 6.7 acres of land in East Providence and, in Article 7 ¹ of the declaration of condominium (declaration), retained a ten-year reservation to withdraw a portion of land from the condominium pursuant to G.L.1956 §§ 34–36.1–2.05 and 34–36.1–2.10.² The reserved real estate—an undeveloped parcel located at 735 Willett Avenue and Scott Drive, East Providence, Rhode Island—is the subject of this appeal. On November 30, 1990, the thirteenth and final amendment to the declaration was filed; it redefined the legal description of the withdrawable land. This amendment soon was followed on December 5, 1990, by a mortgage deed from the declarant to the Rhode Island Central Credit Union (RICCU), secured by the declarant's interest in the withdrawable land.³ RICCU foreclosed on the property on June 15, 1992, and took title by foreclosure deed in satisfaction of the lien. Shortly thereafter, on July 29, 1992, RICCU transferred its interest in the property to DEPCO.⁴ On January 31, 1994, plaintiff purchased DEPCO's interest in the parcel for approximately $52,000.

Significantly, neither RICCU, DEPCO, nor plaintiff sought to withdraw the parcel from the condominium or otherwise exercise any special declarant rights or development rights after plaintiff acquired it.⁵ On January 11, 1999, those development rights, specifically the right to withdraw the parcel from the condominium, expired in accordance with the declaration of condominium. On December 12, 2001, and again on December 20, 2002, plaintiff requested that the association exclude the subject parcel from the condominium pursuant to § 34–36.1–2.18(i).⁶ The association refused to comply, asserting that plaintiffs right to withdraw the parcel had expired and that, therefore, ownership of the parcel had passed to the unit owners' association.

On January 14, 2003, plaintiff filed a three-count complaint ⁷ against defendants seeking a declaratory judgment to quiet title to the subject property and restitution in the amount of $53,335, plus interest, based on a claim of unjust enrichment. The defendants counterclaimed, seeking to quiet title in favor of the association. On February 3, 2004, a hearing was held in the Superior Court on the parties' cross-motions for summary judgment on the competing claims to quiet title to the subject parcel.

In his memorandum and at the hearing, plaintiff contended that defendants erroneously refused to exclude withdrawable land from the condominium pursuant to § 34–36.1–2.18(i). The plaintiff asserted that in accordance with the language in § 34–36.1–2.18(i), after a foreclosure “the person taking title thereto has the right to require from the association, upon request, an amendment excluding the real estate from the condominium,” id., and therefore, plaintiff retained a right to exclude withdrawable land from the condominium, despite the fact that the ten-year period for doing so had expired. The plaintiff argued that his reservation to withdraw the property derived from the mortgagee's statutory right to require exclusion upon foreclosure, not from the declarant's ten-year reservation period. He alleged that the rights of the mortgagee upon foreclosure are different from the declarant's rights. According to plaintiff, when RICCU foreclosed on the property, the declarant's interests terminated, but the subsequent mortgagee acquired greater rights than the declarant, including the right to demand exclusion of the property from the condominium at any time. The plaintiff highlighted the fact that, unlike the declaration from which the declarant received his rights, § 34–36.1–2.18(i) is silent regarding any time limitation on the mortgagee's right to demand that the property be excluded.

Conversely, the association argued that after foreclosure, the mortgagee acquired no greater rights than the declarant's rights as set forth in the declaration. According to defendants, if the court accepted plaintiff's argument, plaintiff would have an infinite window of time during which to exclude the land from the condominium simply by requesting that the association exclude the property. That result, defendants argued, would defeat the intent of the Legislature to impose time limits on the exercise of development rights in a condominium.

At the conclusion of the hearing, the trial justice rendered a bench decision denying plaintiff's motion for summary judgment and granting defendants' cross-motion for summary judgment.⁸ In doing so, the trial justice framed the issue by observing that “[b]oth parties agree * * * that the declarant's right to withdraw the parcel from the condominium project terminated at the time of the foreclosure * * * [but] what the effect of the foreclosure was on the rights of the parties * * * seems to be in somewhat of a dispute.” The trial justice noted that § 34–36.1–2.18(i) only applies to “withdrawable real estate” and that the parcel in question was withdrawable for only a specific period of time, namely ten years after the initial declaration was filed. Citing this Court's decision in Greensleeves, Inc. v. Lee's Wharf Marina Association, 711 A.2d 1140, 1141–42 (R.I.1998), the trial justice noted that for a third party to succeed to special declarant rights, that party must record an instrument evidencing the transfer of such rights. Because neither plaintiff nor his predecessor in title, the foreclosing mortgagee, had requested to succeed to the special declarant rights, as required by § 34–36.1–3.04(c),⁹ the subject parcel ceased to be withdrawable real estate and any right to withdraw the parcel terminated at the time of the foreclosure sale.

Additionally, the trial justice noted that “the condominium association perhaps has a right to expect that no parties [succeeding] to the interest of a declarant would have greater rights than the declarant had.” Consequently, plaintiff could “only take whatever title his grantor ha[d];” and, due to the mortgagee's failure to request to succeed to the special declarant rights, the grantor's right to withdraw real estate no longer existed. The trial justice thus found that RICCU's failure to exercise its right to require the association to exclude the real estate after the foreclosure resulted in title to the parcel vesting in the association. The plaintiff timely appealed.

Standard of Review

“This Court reviews de novo a trial justice's decision granting summary judgment.” Lynch v. Spirit Rent–A–Car, Inc., 965 A.2d 417, 424 (R.I.2009). “We view the evidence in the light most favorable to the nonmoving party, and ‘if we conclude that there are no genuine issues of material fact and that the moving party is entitled to judgment as a matter of law[,]’ we will affirm the judgment.” Moore v. Rhode Island Board of Governors for Higher Education, 18 A.3d 541, 544 (R.I.2011) (quoting Berman v. Sitrin, 991 A.2d 1038, 1043 (R.I.2010)).

This Court likewise reviews questions of statutory interpretation de novo. Waterman v. Caprio, 983 A.2d 841, 844 (R.I.2009). “In matters of statutory interpretation our ultimate goal is to give effect to the purpose of the act as intended by the Legislature.” Webster v. Perrotta, 774 A.2d 68, 75 (R.I.2001) (citing Matter of Falstaff Brewing Corp. Re: Narragansett Brewery Fire, 637 A.2d 1047, 1050 (R.I.1994)). “It is well settled that when the language of a statute is clear and unambiguous, this Court must interpret the statute literally and must give the words of the statute their plain and ordinary meanings.” Waterman, 983 A.2d at 844 (quoting Iselin v. Retirement Board of the Employees' Retirement System of Rhode Island, 943 A.2d 1045, 1049 (R.I.2008)).

Analysis

On appeal, plaintiff contends that the mortgage deed from the declarant to RICCU granted not only a lien interest in the parcel, “but also a statutory right to require exclusion from the [condominium] after foreclosure.” The plaintiff argues that defendants' interpretation of the statute erroneously imposes a ten-year limitation on the right created by § 34–36.1–2.18(i) that the Legislature never intended. The plaintiff asserts that the trial justice erred in refusing to accept that “ § 34–36.1–2.18(i) is a separate statutory right belonging to title holding [m]ortgagees,” apart from declarant's special and development rights, which, plaintiff contends, allows him the “right to require the [association] to exclude the parcel at...