Brickyard Homeowners' Ass'n Management Committee v. Gibbons Realty Co.

• Decision Date: 07 July 1983
• Docket Number: No. 17776,17776
• Citation: 668 P.2d 535
• Parties: BRICKYARD HOMEOWNERS' ASSOCIATION MANAGEMENT COMMITTEE, Plaintiff and Respondent, v. GIBBONS REALTY COMPANY, Harold N. Wilkinson, Brickyard Associates and William A. Gibbons, Defendants and Appellants.
• Court: Utah Supreme Court

Page 535

668 P.2d 535

BRICKYARD HOMEOWNERS' ASSOCIATION MANAGEMENT COMMITTEE Plaintiff and Respondent, v. GIBBONS REALTY COMPANY, Harold N. Wilkinson, Brickyard Associates and William A. Gibbons, Defendants and Appellants.

No. 17776.

Supreme Court of Utah.

July 7, 1983.

David E. Leta and Jim Dalton Dunn, Salt Lake City, for defendants and appellants.

Gary A. Weston and Richard K. Hincks, Salt Lake City, for plaintiff and respondent.

HOWE, Justice:

We granted an interlocutory appeal on petition by the defendants when their motion to dismiss for lack of standing was denied by the court below. They challenge plaintiff's right to sue under U.C.A., 1953, § 57-8-33. This is a case of first impression in our forum.

Plaintiff constitutes the management committee of the Brickyard Homeowners' Association created pursuant to the Utah Condominium Ownership Act, § 57-8-1, et seq. and the declaration and by-laws of the Brickyard Condominiums. Its complaint comprises four causes of action or claims against the defendants, who designed, constructed, marketed and sold the condominiums. The first claim alleges damages for negligent design and workmanship affecting the common areas as well as the "A" and "C" units of the condominium project. The second claim includes breaches of implied warranty of fitness for proper use of the "A" and "C" units and common area facilities as well as of water rights for the fresh water ponds in the common areas. The third claim states a breach of express warranty with respect to the glass installation in the atriums in the "C" units. Under the fourth claim the defendants are charged with falsely representing that the glass installation in those atriums were double pane insulated, and that walkways around the reflection ponds and other common areas would be landscaped and fully maintained.

Defendants' motion to dismiss plaintiff's complaint for failure to state a claim for relief and for lack of standing and/or capacity to sue was denied and a petition for interlocutory appeal was subsequently

granted by this Court. The defendants ask that we direct the district court to order plaintiff to bring its complaint as a class action, or in the alternative to join the 108 unit owners as necessary parties. Defendants further ask for a dismissal of all but the common area claims of the first claim on the ground that management committee lacks standing to sue on them.

I.

A 1961 amendment to the National Housing Act ¹ authorizing F.H.A. insurance on condominium mortgages launched the large-scale development of a new version of home ownership theretofore virtually unknown in the continental United States of America. ² As shrinking land and expanding population centers in the metropolitan areas of the United States combined to render condominium ownership a desirable alternative to conventional home ownership, so arose the need for the protection of prospective owners and for the financial backing by lenders. The 1961 amendment broke the ground to allow for both. The F.H.A.'s model statute for the creation of apartment ownership was quickly fashioned to serve as a model for those jurisdictions that wished to avail themselves of appropriate measures to implement this new form of ownership.

The ... suggested form of statute is intended as a guide to persons or groups interested in legislation which would permit § 234 (condominium) mortgage insurance in a particular jurisdiction. The model statute represents what F.H.A. regards as the best framework within which to obtain the objectives of condominium ownership. However, in order for this statute (or any variation thereof which would achieve the same objectives as this model) to be legally effective, it is advisable that the sponsors of such legislation analyze the other laws of their jurisdiction (e.g. statutes concerning taxation, real property, mortgages, future interests, recording, subdivision platting, liens, insurance, zoning, etc.) to determine in what way such statutes may have to be amended to permit and establish the condominium objectives of the model statute.

Rohan Reskin, supra, Vol. 1 A, Appendix B-3.

Utah was among the early states to adopt a closely parallel version of the F.H.A. model and in 1963 enacted what is popularly known as the Utah Condominium Ownership Act, codified under U.C.A., 1953, § 57-8-1, et seq. We agree with the defendants that Utah legislators specifically evidenced an intent to satisfy doubts expressed by the F.H.A. in financing condominium ownership. Lenders needed guidelines to assure a prospective owner continued protection of his investment and thus the ultimate returns to the lender. That was the rationale behind both the amendment of the National Housing Act and of the subsequent enactment of the Utah Condominium Ownership Act. Moreover, it should be presumed that the F.H.A. prepared the model statute with the aim of achieving uniformity through adoption by the various states of statutes patterned after that model. It has been said that the influences of statutory models tend to establish "a general body of legislative jurisprudence not wholly unlike the general principles of the common law." Sutherland Statutory Construction, Vol. 2 A, § 52.01 (1973). That body of legislative jurisprudence becomes our beacon when we examine our sister forums to guide us in deciding the question before us.

A condominium owner is the holder of a hybrid real property interest consisting of "two distinct tenures, one in severalty and the other in common; both types, although well established separately, are inseparably joined in a condominium." Annot., 69 A.L.R. 3rd 1148, 1149 (1976). It is the inseparability of this interest that makes it a creature unknown to common law and thus amenable to statutory clarification. With

this predicate in mind we must interpret the Condominium Ownership Act in its entirety to construe § 57-8-33 dealing with actions brought by the manager or management committee (hereinafter management committee). "A statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant, and so that one section will not destroy another ..." Sutherland, supra, § 46.06. See also Andrus v. Allred, 17 Utah 2d 106, 404 P.2d 972 (1965); Johnson v. State Tax Commission, 17 Utah 2d 337, 411 P.2d 831 (1966); Millet v. Clark Clinic Corp., Utah, 609 P.2d 934 (1980); Christensen v. Industrial Commission, Utah, 642 P.2d 755 (1982).

II.

U.C.A., 1953, § 57-8-33 provides as follows:

Without limiting the rights of any unit owner, actions may be brought by the manager or management committee, in either case in the discretion of the management committee, on behalf of two or more of the unit owners, as their respective interest may appear, with respect to any cause of action relating to the common areas and facilities or more than one unit. Service of process on two or more unit owners in any action relating to the common areas and facilities or more than one unit may be made on the person designated in the declaration to receive service of process.

Prefatory to our interpretation of this section we note the directive that we construe statutes liberally with a view to effect their objects and to promote justice. U.C.A., 1953, § 68-3-2. Upon a question of the first impression such as this, it is our duty to accord that section effect. Houston Real Estate Inv. Co. v. Hechler, 44 Utah 64, 138 P. 1159 (1914). The language of § 57-8-33 is directory, not mandatory. Actions may be brought by the manager or management committee, in the discretion of the management committee. Where "the language of the statutory provision regarding the person to bring suit is directory ... the party in interest may sue in his own name." 59 Am.Jur.2d, Parties § 24, citing Woodcock v. Board of Education, 55 Utah 458, 187 P. 181 (1920). In that case the plaintiff school teacher, who had been awarded damages by the Utah Industrial Commission, sued her employer to enforce payment of that award. The statute then in existence read that the compensation award "may be recovered in an action in the name of the state for the benefit of the person ... entitled to the same." Id. 187 P. at 182. The defendant in that case argued that plaintiff should have joined the state in the action. This Court found that "[a]fter considering all the provisions of the Act in connection with other statutory provisions, we are of the opinion that it was not the intent or purpose of the Legislature to prevent the injured employee from prosecuting an action or proceeding in his own name if he felt so disposed. The language quoted from the section is directory rather than mandatory." Id. 187 P. at 182. That holding, though dealing with the antithetic situation, applies with equal force to the language under review here.

Section 57-8-33 provides for a new and cumulative, not for an exclusive remedy, without limiting the rights of any unit owner to initiate suit on his own behalf. "There is a presumption that a statute is consistent with the common law, and so a statute creating a new remedy or method of enforcing a right which existed before is regarded as cumulative rather than exclusive of the previous remedies." Sutherland, supra, at § 50.05. That presumption is reinforced by the language contained in § 57-8-33 which expressly reserves the rights of the unit owners and merely allows representation by the management committee on behalf of two or more unit owners. Only two common law principles are specifically excluded under the Condominium Ownership Act: the rule against perpetuities and the rule restricting unreasonable restraints on alienation. Section 57-8-28. Section 57-8-35 again emphasizes the additional and supplementary nature of the Act to other provisions of law, but specifically The defendants urge that § 57-8-33 is an infringement upon our exclusive rule-making power. Section 78-2-4 c...