Coleman v. Cook

• Decision Date: 21 February 2023
• Docket Number: 38758-5-III
• Parties: DONALD COLEMAN and SUE WRIGHT, individuals, and THE HAWK HILL ASSOCIATION, a corporation, Appellants, v. DICK COOK, JOHN CRESS, MARIE EVANS, RAY GOFF, DAVE GULLO, RON HINES, JIM MURPHY, CASSIE SIEGAL, and SCOTT TOWSLEE, individuals, and THE VILLAGES OF GARRISON CREEK MASTER PROPERTY MANAGEMENT ASSOCIATION, a corporation, Respondents.
• Court: Washington Court of Appeals

DONALD COLEMAN and SUE WRIGHT, individuals, and THE HAWK HILL ASSOCIATION, a corporation, Appellants, v. DICK COOK, JOHN CRESS, MARIE EVANS, RAY GOFF, DAVE GULLO, RON HINES, JIM MURPHY, CASSIE SIEGAL, and SCOTT TOWSLEE, individuals, and THE VILLAGES OF GARRISON CREEK MASTER PROPERTY MANAGEMENT ASSOCIATION, a corporation, Respondents.

No. 38758-5-III

Court of Appeals of Washington, Division 3

February 21, 2023

UNPUBLISHED OPINION

Lawrence-Berrey, J.

The Villages of Garrison Creek Master Property Management Association (MPMA) manages The Villages of Garrison Creek (VGC), a development comprised of residential and nonresidential "villages" or "phases." For several years, MPMA dealt with the conflicting interests between the residential and nonresidential phases. Eventually, the board submitted to the membership the question of whether the covenants should be amended to allow various phases to exit VGC, that is, to no longer be part of VGC and its governing association. The membership overwhelmingly approved the exit amendments.

Two homeowners and the residential phase where they live brought this lawsuit against MPMA and its board members, primarily seeking to have the covenant amendments declared invalid. The trial court granted MPMA and its board members summary judgment and dismissed the lawsuit. We affirm in part.

We conclude (1) the exit amendments are valid because they complied with the governing documents and the relevant statutes, and (2) the trial court's summary judgment ruling did not consider plaintiffs' various claims for damages, so those claims are reinstated and remanded.

FACTS

VGC is a planned community made up of land located in College Place Washington. VGC is known for its open spaces and extensive walking trails that follow a creek through well-maintained green spaces. VGC is comprised of different "villages" or "phases," with approximately 240 homes and 400 residents.

An overview of the phases is necessary to understand the dispute:

• Phases 1, 2, 5, 6, 7, 8, and 10 consist of residential properties;

• Phase 3 consists of a nursing home;

• Phase 4 consists of housing units owned and operated by Walla Walla Housing Authority;

• Phase 9 consists of residential lots owned by Pahlisch Homes, and undeveloped commercial property owned by Myra Road Commercial, LLC;

• Phase 10 is a gated residential community, more recently referred to as Hawk Hill Association; and

• Phase 14 consists of 14 acres of undeveloped residential lots, owned by Phase Five Development, LLC, which in turn is owned by Doug Botimer, one of the early developers of VGC.

VGC is managed by MPMA, a Washington nonprofit corporation. Lots within VGC are subject to the "Restated Declaration of Covenants, Conditions, and Restrictions of The Villages of Garrison Creek" (CCRs). Clerk's Papers (CP) at 734.

According to the CCRs, MPMA has no control over the operation or development of the land within Phase 3 or the commercial areas (such as the property owned by Myra Commercial, LLC). Also, Phase 3 and the commercial areas are required to contribute to the expenses and maintenance of any common property, including streets, water and sewer utilities, and walking paths.^[1] Phase 3 and the commercial areas are not responsible for any dues or assessments for the operation of MPMA, or for the maintenance of residential or commercial areas, or areas used exclusively by the residents including park areas, green belts, etc.^[2]

The Walla Walla Housing Authority was one of the first purchasers of VGC land. There are no common areas that were transferred as part of Phase 4, and the Housing Authority made its own connections to sewer and water. Doug Botimer made an oral agreement with the Housing Authority that it was not required to pay any assessments or common expenses. This agreement has always been recognized by MPMA, in that it has never required Phase 4 to pay assessments or common expenses.

MPMA governance

Phase Five Development, LLC, owned by Mr. Botimer, was the original incorporator or declarant that created MPMA. MPMA operates pursuant to its "Articles of Incorporation" and "Bylaws." Its purpose is to "own, develop, and maintain all common areas within the [VGC] and to administer as necessary, the rules and regulations which pertain to enforcement of the [CCRs] which apply to [VGC] and its residents."

CP at 712. It is tasked with managing the affairs of VGC. To the extent authorized by the covenants, it has the power and duty to make and collect assessments and common expenses against members for the benefit of the homeowners.

MPMA is managed by a board consisting of seven directors. Mr. Botimer, effectively the declarant of MPMA, was entitled to appoint two directors and the other five directors are elected by MPMA members. Mr. Botimer had effective control over the board because the directors he appointed could not be removed without his consent, the board could not be enlarged without his consent, and a quorum could not be established without both declarant-appointed directors present. Mr. Botimer at all times relevant to this case was one of the two declarant-appointed directors.

Anyone who owns a lot within VGC is automatically a member of the MPMA. Each member is entitled to one vote for each lot or living unit owned. The nursing home (Phase 3) was formerly entitled to one vote. According to the covenants, "Membership in the [MPMA], once obtained, will be terminated only by selling or disposing of an ownership interest or property interest covered under the [CCRs]." CP at 726. The actual number of members is determined by the units developed or proposed to be developed at any given time.

Collection of assessments by MPMA

MPMA, since its inception, has never collected assessments or common expenses from Phase 3 or Phase 4. With respect to the commercial property owned by Myra Commercial, assessments were originally collected on only part of the lots, but this ceased in 2012.

Donald Coleman was president of MPMA from March 2011 to December 2014. During his tenure, MPMA did not take any action to collect assessments or common expenses beyond those that had been historically collected.

Amendment of CCRs

The procedures for amending the covenants are set forth in paragraph 11 of the CCRs:

Amendments: Any owner may propose amendments to [the CCRs] to the Board of Directors of [MPMA]. The Board of Directors must approve such amendment by a majority vote before such amendment is proposed to the owners, and further provided that the two (2) members of the Board of Directors who are appointed by the Declarant/Owner must have voted in favor of the amendment before it may be submitted to the owners. If the Directors appointed by the Declarant/Owner approve the amendment, together with other Directors who in total represent a majority of the Board, then such amendment shall be presented to the members of [MPMA] for their consideration. The amendment may be submitted for consideration in written form or by the calling of a special meeting. Actual notice must be given to each member before an amendment may be adopted.

[These CCRs] can be amended only by an affirmative vote of a majority of the Board of Directors, which majority includes both Board members who have been appointed by the Declarant/Owner and an affirmative vote of owners who hold at least two-thirds (2/3) of all votes in the [MPMA].

Once an amendment has been properly adopted by the owners, it shall become effective when it is executed and certified on behalf of [MPMA], signed by the President thereof, and signed by at least two members of the Architectural Review Committee, and is then recorded with the Auditor of Walla Walla County, Washington. Any amendment which does not meet the criteria established herein shall be null and void.

CP at 744-45. As can be readily seen, Mr. Botimer had veto power over any proposed amendment because his appointed directors were required to vote in favor of any amendment before it could be voted on by MPMA membership.

Exiting phases

Since around 2016, Donald Coleman and Sue Wright have sought to exit Phase 10 from VGC. That year, Mr. Botimer told the board that he wanted to be removed as declarant and demanded that several phases be allowed to exit from MPMA and VGC. At the January 2017 board meeting, Mr. Botimer presented a plan to effect his resignation and the exiting of certain phases. He insisted that the MPMA was obligated to respond "yes" or "no" to his proposal to exit Phases 3, 4, 10, and 14 from VGC and MPMA. He suggested that Phase 9 be allowed to exit, but he was less insistent about that phase. If the vote failed, Mr. Botimer threatened to cease development of Phase 14 and continue to participate on the board unwillingly and unmotivated.

Regarding Phase 10, Mr. Botimer advised the board to agree to exit the phase because its residents' primary objective was to exit MPMA and take control of the common area maintenance and their own reserve fund. He advised the board that if it failed to negotiate in good faith, Phase 10 residents would "relentlessly continue to deluge" the board with charges of acting outside the authority of the governing documents. CP at 958. If the board agreed, Mr. Botimer advised that it should find the best attorney it could.

Exit resolutions and amendments

The board agreed to Mr. Botimer's proposal and hired an attorney to guide it "step by step through the process" for the resolutions, votes, and exits. CP at 1022. Over the course of 2017, the board discussed the exit of each phase.

On December 8, 2017, the board held a special meeting to vote on the exit resolutions for Phases 3, 4, 9, and 14.^[3] Mr. Botimer gave the board signed written proxy instructions. He instructed...