Cove Owners Ass'n, Inc. v. 1205 Coastal LLC, C. A. CPU6-19-000104

CourtCourt of Common Pleas of Delaware
Writing for the CourtKenneth S. Clark, Jr., Judge.
Docket NumberC. A. CPU6-19-000104
PartiesCOVE OWNERS ASSOCIATION, INC., Plaintiff, v. 1205 COASTAL LLC, Defendant.
Decision Date24 February 2022

COVE OWNERS ASSOCIATION, INC., Plaintiff,
v.

1205 COASTAL LLC, Defendant.

C. A. No. CPU6-19-000104

Court of Common Pleas of Delaware, Sussex

February 24, 2022


Submitted: December 3, 2021

Robert J. Valihura, Jr., Esq.: Attorney for Plaintiff.

Richard E. Berl, Jr., Esq.: Attorney for Defendant.

DECISION AFTER TRIAL

Kenneth S. Clark, Jr., Judge.

This is a debt collection matter arising out of condominium fees and assessments owed to Cove Owners Association ("Plaintiff") by 1205 Coastal LLC ("Defendant"). Trial was held on December 3, 2021. The Court reserved decision following closing arguments. For the following reasons, the Court finds Plaintiff has met its burden of proof and enters judgment against Defendant.

DISCUSSION

The Court heard testimony from four witnesses: Plaintiffs' witnesses Mary Kay Nickel, Patty Walker, Ed Pratt; and Defendant's witness Jeff Treacy. The Court makes the following findings of fact from the relevant testimony, admitted evidence, and weight and credibility the Court attributes to such testimony and evidence, and reaches the following conclusions of law:

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Defendant is the owner of Building 3 in the Cove Condominium Complex located at 1205 Coastal Highway in Dewey Beach, Delaware. Defendant purchased Building 3 in July 2018. Defendant owns a .0375% share in the Cove Condominium. Defendant is responsible for his proportionate share of condominium fees and assessments. Defendant's building is split into commercial and residential use, and is the only building in the condominium with a permitted commercial use. The first floor of the building is leased as a restaurant to MezCali Taquería Y Mezcal Bar; the second floor is residential. Plaintiff filed this action claiming 1) Defendant has failed to pay its assessed share of a capital improvement loan the Cove secured in 2017; and 2) Defendant has failed to pay certain commercial flood insurance costs Plaintiff assessed to Defendant under the terms of the Condominium Declaration[1] and Code of Regulations[2]. Defendant denies owing the amounts claimed, and counterclaims it has been overbilled for flood insurance premiums and other common expenses.

Capital Improvement Loan

The Cove complex consists of both condominiums and townhomes. In 2017 owners in the Cove complex voted to secure a loan for a capital improvement project that totaled roughly $1 million. Owners were responsible for their proportionate share of the loan; Building 3's unit share of the loan was $32, 016.00. Owners had the option to pay in full by October 1, 2018 or to pay monthly with

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interest over the course of four years. The previous owner of Building 3 was aware of this obligation. The loan obligation attaches to ownership of Building 3. Therefore, Defendant assumed the obligation when it purchased and took title to Building 3 of the Cove Condominium.

Ms. Nickel, President of the Cove Owners Association, testified that all owners are responsible for their proportionate share of the capital improvement loan. She noted if an owner chose not to pay his or her share in full by October 2018, those, like Defendant, with a .0375% condominium interest were assessed a monthly payment of $667 until paid in full. All owners have paid on time except Defendant and one other. All owners are responsible for common expenses assessed per the Code of Regulations, which provides that "no unit owner may exempt himself from liability for his contribution toward common expenses by waiver of the use of enjoyment of any of the common elements or by abandonment of his unit." [3]

Defendant, through its principal Mr. Treacy, acknowledges it did not pay the lump-sum assessment for the capital improvement project, nor has it paid the alternate $667 monthly assessment for the project loan. Defendant essentially maintains it has not paid the loan assessment because sufficient improvement work on its particular building has yet to be undertaken, and it had been in negotiations with Plaintiff to determine the scope and commencement of work on Building 3 and the appurtenances to the restaurant. Mr. Treacy also alleges he

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was unaware of this condominium obligation when he purchased Building 3. However, he was the commercial tenant of the predecessor owner of Building 3 when the capital loan was incurred, and the project approved by Plaintiff.

"As with any other contract, the intent of the parties to a condominium declaration or code of regulations must be ascertained from the language of the contract. Where that language is clear and unambiguous, this court will accord that language its ordinary meaning."[4] Further, the obligation to pay condominium fees is unconditional.[5] "Whatever grievance a unit owner may have against the condominium trustees must not be permitted to affect the collection of lawfully assessed common area expense charges. . .. For the same reason that taxpayers may not lawfully decline to pay lawfully assessed taxes because of some grievance or claim against the taxing governmental unit, a condominium unit owner may not decline to pay lawful assessments."[6] The relevant language of the Cove Condominium Declaration and Code of Regulations is clear and unambiguous in its creation and imposition of the obligation upon owners to pay their proportionate share of the capital improvement loan....

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