IDC Props., Inc. v. Goat Island S. Condo. Ass'n, Inc.

• Citation: 128 A.3d 383
• Decision Date: 14 December 2015
• Docket Number: Nos. 2014–199–Appeal,2014–200–Appeal.,s. 2014–199–Appeal
• Parties: IDC PROPERTIES, INC., et al. v. GOAT ISLAND SOUTH CONDOMINIUM ASSOCIATION, INC., et al.
• Court: Rhode Island Supreme Court

128 A.3d 383

IDC PROPERTIES, INC., et al.

v.GOAT ISLAND SOUTH CONDOMINIUM ASSOCIATION, INC., et al.

Nos. 2014–199–Appeal

2014–200–Appeal.

Supreme Court of Rhode Island.

Dec. 14, 2015.

Stephen J. McGillivray, Esq., Edmund A. Allcock, Esq., for Plaintiffs.

William R. Grimm, Esq., Providence, for Defendants.

Present: SUTTELL, C.J., GOLDBERG, FLAHERTY, and INDEGLIA, JJ.

OPINION

Justice INDEGLIA, for the Court.

The plaintiffs in this consolidated appeal, IDC Properties, Inc. (IDC) and Thomas Roos (Roos) (collectively, plaintiffs), appeal from an entry of summary judgment in favor of the defendants, Goat Island South Condominium Association, Inc. (GISCA), America Condominium Association, Inc. (America), Capella South Condominium Association, Inc. (Capella), Harbor Houses Condominium Association, Inc. (Harbor Houses), and Warren Galkin, Neal Smith, Cornelius Bond, Thomas O'Brien, Daniel Kinder, Shirley Mintz, Raymond Morrisette, and Reeder Fox, individually (collectively, defendants), on their five-count complaint in this ongoing chronicle surrounding the condominiums located at Goat Island South—A Waterfront Condominium (GIS Condominium) in Newport, Rhode Island. Likewise, Harbor Houses appeals from an entry of summary judgment in favor of GISCA on its cross-claim. This matter came before the Supreme Court on November 4, 2015, pursuant to an order directing the parties to appear and show cause why the issues raised should not be summarily decided. After hearing the arguments of counsel and reviewing the memoranda submitted on behalf of the parties, we are satisfied that cause has not been shown. Accordingly, we shall decide the matters at this time without further briefing or argument. For the reasons set forth herein, we affirm the judgment of the Superior Court.

IFacts and Travel

We are rather familiar with the history of this case, as we have addressed various issues involving the parties on three prior occasions. Our first instance was in America Condominium Association, Inc. v. IDC, Inc., 844 A.2d 117 (R.I.2004) (America I ), which includes a full recitation of the facts underlying the initial dispute between the parties. As a refresher, in 1988, "Globe Manufacturing Co. (Globe), predecessor in interest of [plaintiffs], recorded a declaration of condominium designated as ‘Goat Island South—A Waterfront Condominium’ * * * in the Land Evidence Records of the City of Newport." Id. at 120. The condominium area was located across twenty-three acres on scenic Goat Island. At the time, Roos was Globe's director. The condominium area included "six defined parcels," three of which were residential sub-condominiums with 154 total units combined: America, a forty-six-unit apartment building; Capella, an eighty-nine-unit apartment building; and Harbor Houses, which consists of nineteen waterfront, townhouse-style homes. Id. The other three parcels were undeveloped and were dubbed the West Development Unit, the South Development Unit, and the Reserved Area/North Development Unit. GIS Condominium is the master condominium, which was designed to manage the common elements shared by the sub-condominiums. Globe eventually transferred its interests in the GIS Condominium to IDC, Inc., which later transferred its interests to IDC.

In America I, America, Capella, and Harbor Houses filed an action against Roos, IDC, and IDC, Inc., asserting that Roos and IDC failed to exercise their developmental rights as to the undeveloped units, and, as a result, those undeveloped areas were owned by America, Capella, and Harbor Houses. America I, 844 A.2d at 125. In addition, they asserted that the voting procedures under the GIS first amended restated master declaration (FAR) were invalid under the Rhode Island Condominium Act (the act), G.L. 1956 chapter 36.1 of title 34. America I, 844 A.2d at 125. While the Superior Court agreed that the voting procedures under the FAR were invalid and that the development rights of Roos and IDC had expired, America, Capella, and Harbor Houses nonetheless appealed the grant of partial summary judgment in their favor on the grounds that they should have also been granted title to the undeveloped parcels. Id. We affirmed the Superior Court's ruling, but also held that "the hearing justice should have declared that title to the disputed property vested in the individual unit owners * * *." Id. at 133. The case was ultimately reargued, and, following the rehearing, we clarified that the undeveloped parcels had always been common elements owned by the individual condominium unit owners from the creation of the GIS Condominium. America Condominium Association, Inc. v. IDC, Inc., 870 A.2d 434, 443 (R.I.2005) ( America II ).

Following our decisions in America I and America II, the condominium unit owners crafted a second amended restated master declaration (SAR), which, in 2007, nearly 80 percent of the unit owners voted to adopt. The basic structure remained the same—that is, GIS Condominium continued to serve as the master condominium and America, Capella, and Harbor Houses continued as sub-condominiums with their own declarations—but the ownership interests of the common elements were reallocated among the unit owners to include the undeveloped units in accordance with our decisions in America I and America II. The SAR also added a review process for proposed alterations to the Harbor Houses units.

Then came Sisto v. America Condominium Association, Inc., 68 A.3d 603 (R.I.2013). In that case, the plaintiff owned a unit in the Harbor Houses, but wanted to expand the size of his unit, thereby encroaching upon the surrounding land, which was "designated as a limited common element—meaning that it is ‘reserved for the use by one or more but fewer than all [u]nits, and intended for the exclusive use of such [u]nits.’ " Id. at 606. The plaintiff argued that the plain terms of the SAR did not require him to obtain consent from the other 153 unit owners in the GIS Condominium community to expand his unit. Id. at 612. We agreed that the terms of the SAR did not require unanimous consent, but we also said that the act's requirement of unanimous approval from all unit owners for any expansion of a unit onto common elements superseded any contradictory provision of the SAR. Id. at 612–14. Thus, despite what the SAR said, we determined that the plaintiff needed to get unanimous approval from the other 153 unit owners before lawfully expanding his unit. Id. at 614.

In the midst of all of this litigation, in 2008 plaintiffs filed the instant action, seeking to invalidate the overarching GIS Condominium. This would result in America, Capella, and Harbor Houses moving forward as individual, independent condominiums "of their own accord." They sought a declaratory judgment that the original master declaration creating the GIS Condominium was invalid and therefore land that was not part of the sub-condominiums—namely, the common elements—was owned by plaintiffs (count 1); that the FAR was invalid (count 2); and that the SAR was void ab initio (count 3). The plaintiffs also alleged that the individually named GIS executive board defendants breached the covenant of good faith and fair dealing (count 4) and breached their duty of ordinary and reasonable care (count 5) by unilaterally adopting the invalid structure set forth in the SAR.

GISCA and the individual board members moved for summary judgment on all counts, which America and Capella joined; plaintiffs objected and cross-moved for summary judgment on counts one through three. Harbor Houses strategically jumped ship and amended its answer to file a cross-claim against GISCA, also seeking a declaratory judgment that the SAR was invalid, and thus the GIS Condominium is not a valid condominium. Harbor Houses then moved for summary judgment on its cross-claim.

On February 10, 2014, the hearing justice heard oral arguments from both sides on the motions for summary judgment. GISCA argued that plaintiffs' first two claims were barred by res judicata and estoppel by deed, that the SAR was valid, and that the claims against the individual board members were without merit. Relying on a portion of our decision in Sisto, Harbor Houses argued that the SAR was invalid under the act because it does not define boundaries for the individual condominium units. The plaintiffs also filed a motion to amend their complaint to add a claim to rescind the SAR due to mutual mistake (count 6), arguing that the parties that adopted the SAR thought that it created "a 3–unit condominium consisting of 3 airspace units," but that our decision in Sisto had rendered this belief incorrect.

On March 27, 2014, the hearing justice issued a bench decision on the summary judgment motions and plaintiffs' motion to amend. He first denied plaintiffs' motion to amend, finding that the amendment was futile because they failed to allege fraud, misrepresentation, violence, or undue influence as a cause of the alleged mutual mistake. The hearing justice then granted summary judgment in favor of defendants on all plaintiffs' claims. He ruled that counts 1 and 2 of plaintiffs' claims were barred by res judicata because they could have been raised in the America litigation. He further indicated that the claims were barred by the doctrine of estoppel by deed because plaintiffs sold condominium units under the original and FAR declarations and warranted that the units were part of a valid condominium when they were sold, and were therefore barred from subsequently denying the validity of the condominium. The hearing justice also determined that the SAR did not violate our decisions in America I and America II and thus was valid.

Moreover, the hearing justice rejected Harbor Houses' reliance on Sisto for its argument that the SAR is invalid because it does not contain units or unit boundaries, and therefore does not create a valid condominium. Rather, he concluded that Harbor Houses took language from Sisto out of context, and that the SAR...