Anderson v. Applewood Water Ass'n, Inc.
| Decision Date | 03 November 2016 |
| Docket Number | Court of Appeals No. 15CA1139 |
| Parties | Mark R. ANDERSON, Charles L. Patrick, Alberta R. Patrick, Theodore G. Rossin, Andrea R. Mihajlov, Marcia R. Petrun, and Mark Petrun, Petitioners–Appellants, v. APPLEWOOD WATER ASSOCIATION, INC., d/b/a Applewood Estates Homeowners Association, Respondant–Appellee. |
| Court | Colorado Court of Appeals |
Herms & Herrera, LLC, David M. Herrera, Fort Collins, Colorado, for Plaintiffs–Appellants
CYLG, P.C., Christopher S. Maciejewski, Christopher A. Young, Denver, Colorado, for Defendant–Appellee
Opinion by JUDGE FREYRE
¶ 1 In this appeal from the trial court's order denying a motion for preliminary injunction, plaintiffs, Mark R. Anderson, Charles L. Patrick, Alberta R. Patrick, Theodore G. Rossin, Andrea R. Mihajlov, Marcia R. Petrun, and Mark Petrun (Owners), sought to enjoin the defendant, Applewood Water Association, Inc., d/b/a Applewood Estates Homeowners Association (Association), from performing two acts. First, Owners sought to enjoin the Association from conducting special meetings of the board of directors (board) in violation of its bylaws, § 38–33.3–308(2.5), C.R.S. 2016, of the Colorado Common Interest Ownership Act (CCIOA), and § 7–128–203(2), C.R.S. 2016, of the Colorado Revised Nonprofit Corporations Act (CRNCA). Second, Owners sought to enjoin the Association from submitting the "Amended and Restated Declaration of Covenants, Conditions and Restrictions of Applewood Estates" (Amended Declaration) for a full membership vote based on their belief that the Amended Declaration illegally conveyed their property rights in the bridle path easement to the Association and illegally expanded the scope of use of the easement without their consent. Because, as a matter of first impression, we conclude the trial court could enjoin the Association from holding special board meetings without providing the notice required under CCIOA and CRNCA, we reverse the trial court's order as to that preliminary injunction request and remand for further factual findings under Rathke v. MacFarlane , 648 P.2d 648, 653–54 (Colo. 1982). Based on the information provided in supplemental briefs filed by both parties, we conclude the second injunction request is moot because a vote on the Amended Declaration has already occurred. Therefore, we dismiss that portion of the appeal.
¶ 2 This case involves a dispute between the Association and some individual lot owners over the board's decision, made in special meetings, to retain legal counsel to draft the Amended Declaration. Owners contend that the board conducted these special meetings without giving them the required notice and an opportunity to provide input. They also contend that the Amended Declaration unlawfully expands the use of the bridal path easement beyond its original intended use without their consent. Because the relevant facts are not disputed, we provide a brief history of the covenants and bylaws and then summarize the hearing evidence.
¶ 3 In 1964, the Applewood Estates plat map was recorded with the Larimer County Clerk and Recorder and stated, "All Utility & Bridle Path Easements Are 10' On Each Side of Property Lines Unless Otherwise Noted." This map identified the lots in the subdivision that were subject to the easements.
¶ 4 Additionally, the Association was created as a nonprofit corporation, and it recorded a list of protective covenants. Covenant 9 related to easements and stated in relevant part:
¶ 5 Covenant 15 provided for amendments to the covenants by two-thirds approval of the association members.
¶ 6 The Association also created bylaws that set forth its purpose and rules for governance and specifically addressed special meetings of its members and of the board.1 These bylaws required thirty days' notice to all members of regular and special meetings, and they permitted special meetings of the board upon giving reasonable notice to each director. The bylaws did not require notice of special board meetings to association members.
¶ 7 In 1983, the Association amended the original covenants by a two-thirds member vote and added several definitions relevant here. The amended covenants defined "Common Area" as all real property owned by the Association for the common use and enjoyment of the members. It separately defined "Easements" as designated areas used by horseback riders and hikers and for utilities. It defined "Common Facilities" as irrigation rights managed by the Association, easement paths designated on the recorded plats, and roads.
¶ 8 The amended covenants further stated that every member had a right to the enjoyment of the common areas, common facilities, and easements. They continued to require that the easements be maintained "by the owner of the plot appurtenant to it so as to create a safe area for horseback riding" and expanded the use of the easement to include hiking. They contained the added restriction that "no motorized vehicles will be allowed." The amended covenants also permitted future amendment by two-thirds approval of the association members.
¶ 9 In 2014, the board held special meetings to discuss, among other things, further amending the covenants. Witnesses testified that the board held these special meetings without providing notice. They stated that they learned of these meetings from the minutes posted thereafter.
¶ 10 Hours before the annual meeting, the board circulated a proposed copy of the Amended Declaration, which purported to alter the scope of the easements by expanding the activities that could be conducted in them. A membership vote was scheduled for June 2015.
¶ 11 The Amended Declaration contained a new provision entitled "Names & Description of Property/Easements" (Article 2). As relevant here, this article expanded the permissible uses of the easement to include all nonmotorized, muscle-powered activities (in addition to horseback riding and hiking). The Amended Declaration continued to require members to maintain the bridle paths appurtenant to their lots, "according to the Rules and Regulations set by the Board of Directors," and continued to permit future amendment by two-thirds membership approval.
¶ 12 Owners learned of the special board meetings before the annual membership meeting scheduled in March 2015 and filed an action seeking declaratory relief that the board could not hold special meetings without proper notice, and that the easement could not be unilaterally altered. Contemporaneously, Owners filed the present action for a preliminary injunction. They asked the trial court to enjoin the Association from submitting the Amended Declaration for a vote and to enjoin the board from holding special meetings contrary to law, pending a decision on the merits of the case. Following a hearing, the court denied both requests.
¶ 13 Owners make two contentions. First, they contend that the trial court erred as a matter of law when it found that it had no legal authority to enjoin future violations of civil statutes. Second, they contend that the court abused its discretion when it refused to enjoin the Association from modifying the covenants and expanding the use of the easement. We agree with their first contention and conclude that a trial court may enjoin future violations of a civil statute. We find their second contention moot.
¶ 14 We review a trial court's decision to grant or deny preliminary injunctive relief for an abuse of discretion. Phx. Capital, Inc. v. Dowell , 176 P.3d 835, 840 (Colo. App. 2007). We will overturn a trial court's decision on a motion for a preliminary injunction if the court made a legal error or the decision was manifestly arbitrary, unreasonable, or unfair. Sanger v. Dennis , 148 P.3d 404, 410 (Colo. App. 2006). If only legal, rather than factual, questions are at issue, we review the trial court's preliminary injunction ruling de novo. Gitlitz v. Bellock , 171 P.3d 1274, 1278 (Colo. App. 2007).
¶ 15 A preliminary injunction preserves the status quo or protects a party's rights pending the final determination of a cause. Id. (citing City of Golden v. Simpson , 83 P.3d 87, 96 (Colo. 2004) ). Its purpose is to prevent irreparable harm prior to a decision on the merits of a case. Id. In considering a motion for a preliminary injunction, the trial court must find that the moving party has demonstrated (1) a reasonable probability of success on the merits; (2) a danger of real, immediate, and irreparable injury that may be prevented by injunctive relief; (3) lack of a plain, speedy, and adequate remedy at law; (4) no disservice to the public interest; (5) a balance of the equities in favor of the injunction; and (6) the injunction's preservation of the status quo pending a trial on the merits. Id. (citing Rathke , 648 P.2d at 653–54 ). If each criterion is not met, injunctive relief should not be granted. Gitlitz , 171 P.3d at 1278.
¶ 16 The parties agree that the Association is governed by CCIOA and CRNCA, both of which address special board meetings; however, they disagree about which provisions apply. The court did not resolve this issue or apply the Rathke factors to the issue of special board meetings because it found, as a matter of law, that it could not enjoin future violations of civil statutes. Because we conclude that CCIOA and CRNCA create a legally protected interest in open meetings and that the trial court may enjoin violations of their provisions, we remand the case for the court to make factual findings under Rathke and to determine whether Owners have satisfied their burden of...
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