Buck Mountain Owners' Ass'n, Nonprofit Corp. v. Prestwich

• Decision Date: 30 April 2013
• Docket Number: No. 67714–4–I.,67714–4–I.
• Citation: 308 P.3d 644,174 Wash.App. 702
• Court: Washington Court of Appeals
• Parties: BUCK MOUNTAIN OWNERS' ASSOCIATION, a Washington nonprofit corporation, Respondent, v. Glenn PRESTWICH and Barbara Bentley, his spouse, and their marital community, individually and as trustees of the Bentley–Prestwich Living Trust, Appellants, v. J. Michael Starr and Richard U. Starr, trustees, and the Jack M. Starr Credit Shelter Trust, Respondents.

174 Wash.App. 702

308 P.3d 644

BUCK MOUNTAIN OWNERS' ASSOCIATION, a Washington nonprofit corporation, Respondent,

v.Glenn PRESTWICH and Barbara Bentley, his spouse, and their marital community, individually and as trustees of the Bentley–Prestwich Living Trust, Appellants,

v.J. Michael Starr and Richard U. Starr, trustees, and the Jack M. Starr Credit Shelter Trust, Respondents.

No. 67714–4–I.

Court of Appeals of Washington, Division 1.

March 4, 2013.

Publication Ordered April 30, 2013.

Howard Mark Goodfriend, Valerie a Villacin, Smith Goodfriend PS, Seattle, WA, Michael Kent Murray, Attorney at Law, Eastsound, WA, for Appellant.

Derek A. Mann, Attorney at Law, Eastsound, WA, Michael C. Simon, Landerholm, P.S., Vancouver, WA, for Respondent

J. Michael Starr, Eugene, OR, pro se.

Richard U. Starr, Eugene, OR, pro se.

Jack M. Starr Credit Shelter Tru, Eugene, OR, pro se.

LAU, J.

[174 Wash.App. 707]¶ 1 Absent an agreement, joint users of a common roadway are obligated to contribute to the costs reasonably incurred for repair and maintenance of the roadway. In this declaratory judgment action, Barbara Bentley and Glenn Prestwich (Bentley–Prestwich) contend they have no obligation to share repair and maintenance costs for a roadway they indisputably use for ingress and egress. In the alternative, they argue that any obligation imposed should be calculated based on their actual use of the roadway. After a six-day bench trial, the trial court entered judgment against Bentley–Prestwich for past maintenance and repair costs, including interest, late fees, and construction impact fees. It also obligated Bentley–Prestwich to share 62.5 percent of a full share of future maintenance and repair costs and ordered them to execute a binding covenant. We reverse and remand with instructions to strike the binding covenant and otherwise affirm the trial court in all respects consistent with this opinion.

FACTS

¶ 2 In 1977, Starr and Guynup ¹ conveyed by statutory warranty deed ² approximately 1,200 acres on Orcas Island's Buck Mountain to a group of developers.³ Starr and Guynup retained a 30–acre L-shaped parcel located within the conveyed land. They also retained a 50–foot–wide access easement (1977 easement) originating at the west entrance to the 1,200–acre conveyance, continuing over Buck Mountain Road and terminating on what is now known as Parker Reef Road.⁴

¶ 3 In 1977, the developers granted a deed of trust to secure the majority of the purchase price.⁵ The deed of trust obligated the developers to “construct a serviceable rock roadbed” along the route defined by the 1977 easement. The deed of trust and the statutory warranty deed were silent on the issue of road maintenance.⁶

¶ 4 In 1981, the developers defaulted on their obligation to pay the purchase price. In lieu of foreclosure, Starr and Guynup permitted the developers to reconvey via quit claim deed two 5–acre lots that were part of the original 1,200–acre conveyance.⁷ As part of this transaction, Starr and Guynup and the developers executed a declaration of easement (1981 easement) that extinguished the 1977 easement.⁸ The 1981 easement stated that the parties “do hereby grant, create, assign, set over, establish and warrant in perpetuity each to the other ” a new “non-exclusive” access and utility easement. (Emphasis added.)

¶ 5 The 1981 easement granted Starr and Guynup continued access to their L-shaped parcel through developer-owned land, via Buck Mountain Road and Parker Reef Road. It also permitted the developers to travel through Starr and Guynup's L-shaped parcel to reach adjacent developer-owned land at the end of Parker Reef Road. In essence, it permitted shared use of Buck Mountain Road and Parker Reef Road.⁹ Like the extinguished 1977 easement, however, the 1981 easement did not allocate responsibility for road maintenance.

[174 Wash.App. 710]¶ 6 Around the same time, the developers attempted to subdivide portions of their land. San Juan County sued the developers, alleging certain lots had been created illegally. As part of a settlement agreement, the developers agreed to form the Buck Mountain Owners' Association. They also agreed to adopt comprehensive regulations governing all land conveyed by the 1977 deed. In 1983, the Association recorded articles of incorporation, bylaws, and covenants, conditions, and restrictions (CCRs).¹⁰

¶ 7 Following the Association's formation, Starr and Guynup subdivided their L-shaped parcel property into two lots. The Jack M. Starr Credit Shelter Trust (Starr Trust) purchased one of the lots. Starr and Guynup sold the remaining land within the L-shaped parcel to various owners. It is undisputed that the Starr Trust property was not bound by the CCRs.

¶ 8 The Association's bylaws obligated its members to pay assessments to “meet common expenses.” Ex. 33, at 9. The Association assessed each of its member parcels a uniform fee for road maintenance. Because the L-shaped parcel lay outside the Association's “jurisdiction,” as defined by its governing documents, the Association entered into separate agreements with some owners within that parcel. These voluntary side agreements obligated the nonmember owners to pay 62.5 percent of the road maintenance fee assessed on member parcels.

¶ 9 The Starr Trust did not enter into a side agreement with the Association. Even so, the Association assessed road maintenance fees on the Starr Trust property. It is undisputed that the Starr Trust and its predecessor-in-interest paid 100 percent of the assessments levied by the Association.

¶ 10 In 2005, the Starr Trust conveyed by statutory warranty deed, subject to the 1981 easement, its lot in the L-shaped parcel to Bentley–Prestwich, as trustees of the Bentley–Prestwich Living Trust. As stated above, the 1981 easement allowed Association members to travel across the L-shaped parcel (now partially owned by Bentley–Prestwich) and simultaneously allowed Bentley–Prestwich to access their newly-acquired land via Buck Mountain Road and Parker Reef Road (both maintained exclusively by the Association).

¶ 11 About the same time Bentley–Prestwich purchased their current property, they also owned property commonly known as the “Klalakamish property” or “Cornell property.” They owned the Klalakamish property, located within the Association's jurisdiction, from approximately 2002 to 2006. During this four-year period, they were members of the Association, paid annual assessments in full, and knew the Association maintained 10 miles of roadway. Bentley–Prestwich had full use of these roads and the road easement at issue here. Bentley–Prestwich also knew when they purchased the current property that their sellers (non-Association members) had been paying road maintenance assessmentsto the Association based on the closing documents. Bentley–Prestwich paid their prorated share of the outstanding assessment at closing.¹¹

¶ 12 Shortly after purchasing the property, Bentley–Prestwich received a welcome letter from the Association. The letter confirmed that the Bentley–Prestwich property was not governed by the Association, stating the property is “one of only a tiny handful of lots on Buck Mountain that are not encumbered with our CC & R's and are not officially members in the Buck Mountain Owners' Association.” The Association declared, “While you are not members, you have access to your property over roads maintained by us, and therefore are subject to a road assessment.”

¶ 13 In April 2006, the Association mailed Bentley–Prestwich a $437.50 road maintenance assessment. Bentley–Prestwichrefused to pay in full, offering instead to pay seven percent of the assessment. After a series of negotiations, the Association mailed Bentley–Prestwich another letter requesting that they pay 62.5 percent of the road maintenance fee regularly charged to Association members. Bentley–Prestwich disregarded the letter.

¶ 14 Later that year, the Association sued Bentley–Prestwich. The Association sought a declaration under the Uniform Declaratory Judgments Act, chapter 7.24 RCW, of the parties' respective road maintenance obligations under the 1981 easement. Bentley–Prestwich filed several counterclaims, including claims for abuse of process and malicious prosecution. Nearly a year after the Association brought suit, Bentley–Prestwich also filed a third-party complaint against the Starr Trust. They alleged that the Starr Trust breached its statutory covenant against encumbrances and its statutory covenant to defend, by conveying title subject to an undisclosed obligation to pay the Association's road maintenance assessments.

¶ 15 In August 2011, following a six-day bench trial, the trial court denied Bentley–Prestwich's counterclaims ¹² and entered judgment in favor of the Association for $11,132.44 in past-due assessments, construction impact fees, late fees, and interest. It also ordered Bentley–Prestwich to execute a road maintenance agreement obligating them to contribute 62.5 percent of the road maintenance costs regularly assessed by the Association on its members, or 100 percent if Bentley–Prestwich use the property for commercial purposes (i.e., as rental property). The agreement treated unpaid assessments as a “lien upon the land” and permitted the Association to “foreclose [the lien] in the same manner as a mortgage.” The agreement also provided, “This Agreement shall run with the land ... and shall be binding upon all parties having or acquiring any right, title, or interest” in the property.

[174 Wash.App. 713]¶ 16 The trial court entered a separate order dismissing Prestwich's third party claim against the Starr Trust. It concluded that Bentley–Prestwich's obligation to share road maintenance costs did not constitute an “encumbrance” within the meaning of RCW 64.04.030, which requires the grantor of a statutory warranty deed to promise that the title being conveyed is free of encumbrances. Accordingly, it ruled that the Starr Trust did not breach...