Kiona Park Estates v. Dehls

• Citation: 491 P.3d 247
• Decision Date: 07 July 2021
• Docket Number: No. 54477-6-II,54477-6-II
• Court: Washington Court of Appeals
• Parties: KIONA PARK ESTATES, a Washington non-profit corporation, Respondent, v. Avera Lee DEHLS and "Jane Doe" Dehls, husband and wife; Jacqueline Dehls and "John Doe" Dehls, wife and husband, and Jeff Shelton, as his separate estate, Appellants.

491 P.3d 247

KIONA PARK ESTATES, a Washington non-profit corporation, Respondent,

v.Avera Lee DEHLS and "Jane Doe" Dehls, husband and wife; Jacqueline Dehls and "John Doe" Dehls, wife and husband, and Jeff Shelton, as his separate estate, Appellants.

No. 54477-6-II

Court of Appeals of Washington, Division 2.

Filed July 7, 2021

Christi C. Goeller, Attorney at Law, 1800 Cooper Point Rd. Sw Ste. 8, Olympia, WA, 98502-1179, for Appellants.

Kelly Ann Delaat-Maher, Smith Alling P.S., 1501 Dock St., Tacoma, WA, 98402-3209, for Respondent.

PUBLISHED OPINION

Sutton, J.

¶ 1 Avera Dehls appeals the superior court's judgment and order granting summary judgment to the Kiona Park Estates Association (Association) to enforce a recorded lien for Dehls's unpaid annual homeowners association (HOA) dues from 2002 to 2018. This case presents an issue of first impression: Which statute of limitations applies to an action to enforce a HOA's lien where chapter 64.38 RCW, the governing chapter for HOAs, does not contain a limitations period.

¶ 2 We hold that the applicable statute of limitations is six years under RCW 4.16.040 because the governing documents are written agreements. We further hold that each annual HOA dues assessment is a discreet claim. Accordingly, based on the six-year limitations period, the Association is entitled to collect unpaid dues for Dehls for only the time period 2013 to 2018. Thus, we hold that the superior court erred by granting the Association summary judgment for the entire amount of unpaid dues from 2003 to 2018. We reverse the court's judgment and order granting summary judgment and we remand to the superior court to vacate the judgment and order and enter an amended judgment and order consistent with this opinion.

FACTS

I. BACKGROUND FACTS

¶ 3 The Association is a Washington non-profit corporation. It was formed to, among other things, collect dues and assessments from its membership and to enforce the covenants and restrictions in a development known as Kiona Park Estates.

¶ 4 The Association's governing documents are the original Declaration of Protective Covenants and Easements, the 1986 Restated Declaration of Protective Covenants and Easements (collectively "Declarations"), and the Articles of Incorporation; the Restated Declaration has been amended during the relevant time period.¹ Articles C and D of the Declarations grant authority to the Association to assess dues against each member of the Association for maintenance, and provide that any unpaid dues become a lien. The dues are required to be paid in January of each year. The dues amount was $150 per year in 2002, $200 per year from 2003 to 2017, and $250 per year beginning in 2018.

¶ 5 Section C(2)(a) of the Declarations states, in relevant part, "Any dues that remain unpaid for a period of ninety (90) days shall become a lien against the defaulting lot owner's property enforceable as any other real estate lien in the State of Washington." Clerk's Papers (CP) at 85, 98, 115. The Association's Articles of Incorporation state, "Delinquent dues and assessments will constitute a lien upon the parcel(s) of real property owned by the delinquent member of the corporation," consistent with the provisions of the Declarations. CP at 133. Article E, section 2 states that the "parties in interest" have the right to enforce the Declarations. CP at 60, 72, 99-100. Association bylaws adopted in 2001 and amended in 2017 also support the HOA's right and ability to assess an owner for dues and take enforcement action against an owner for unpaid dues in the form of a lien or collection.

¶ 6 Dehls purchased real property in the Kiona Park Estates development in 1989 and is a member of the Association. Since 2001, Dehls has failed to make payments to the Association as required by the Declarations, and he became delinquent beginning in January 2002. The Association filed and recorded liens against Dehls's property in 2003, 2006, and 2018. The 2003 lien was for dues owed for 2002 and 2003. The 2006 lien referred only to dues owed in 2004 and 2005, as well as attorney fees. The 2018 lien aggregated all the dues Dehls owed beginning in 2002, stating that Dehls was "in arrears of annual membership dues and assessments, interest, and/or late charges in the amount of $10,041.67" plus attorney fees in the amount of $368.02, for a total owed of $10,409.69. CP at 38.

II. PROCEDURAL FACTS

¶ 7 The Association filed a complaint against Dehls in November 2018, seeking damages and foreclosure on all the past liens and past due balances. Dehls answered the complaint and asserted the affirmative defense of statute of limitations.

¶ 8 In June 2019, the Association filed a motion for summary judgment and argued that Dehls breached his duties under the Declarations. In support of its motion, the Association filed declarations from its attorney, treasurer, and president. The Association filed, among other documents, the Declarations in their current and past versions, the Articles of Incorporation, and the Association's ledger outlining the amounts Dehls owed plus interest accrued, for a total amount due of $7,101.00. Dehls opposed this motion and argued that the Association could not collect the past dues from 2002 because the Declarations are contracts and thus, the six-year statute of limitations under RCW 4.16.140 applied. The Association replied that it was not subject to a six-year statute of limitations because the Declarations and Articles of Incorporation were not "contracts," but were either more akin to an open account under RCW 4.16.150 or were subject to a ten-year statute of limitations under RCW 4.16.120.

¶ 9 The superior court granted the Association's motion for summary judgment. The court awarded the Association $7,101.00 for past dues, as well as $7,143.74 in attorney fees and $1,046.00 in costs. Dehls filed a motion for reconsideration, which the superior court denied.

¶ 10 Dehls appeals the superior court's judgment and order granting the Association's motion for summary judgment and denying Dehls's motion for reconsideration.

ANALYSIS

I. SUMMARY JUDGMENT

¶ 11 Dehls argues that the superior court erred by granting the Association's motion for summary judgment because the Declarations constitute a contract or written agreement, and thus, the six-year statute of limitations under RCW 4.16.140 applies, barring the Association's claim to enforce liens prior to 2013. We hold that the six-year statute of limitations in RCW 4.16.040 applies because the debt arose from the Declarations, which are written agreements. Thus, the superior court erred by granting summary judgment in the Association's favor for dues owed for the period of 2002 to 2012.

A. LEGAL PRINCIPLES

1. Summary Judgment

¶ 12 We review summary judgment decisions de novo. Zonnebloem, LLC v. Blue Bay Holdings, LLC , 200 Wash. App. 178, 182, 401 P.3d 468 (2017). Summary judgment is appropriate where the pleadings, admissions on file, and affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. CR 56(c). Here, the materials facts are undisputed.

2. Governing Documents

¶ 13 A HOA's governing documents are interpreted in accordance with accepted rules of contract interpretation. See Bangerter v. Hat Island Community Ass'n , 14 Wash. App. 2d 718, 735, 472 P.3d 998 (2020) ; see also RCW 64.38.010(10). Contract interpretation is a question of law that we review de novo. Dave Johnson Ins. v. Wright , 167 Wash. App. 758, 769, 275 P.3d 339 (2012). "The purpose of contract interpretation is to determine the parties’ intent." Roats v. Blakely Island Maint. Comm'n, Inc. , 169 Wash. App. 263, 274, 279 P.3d 943 (2012). Washington courts follow the context rule of contract interpretation, which allows a court, while viewing the contract as a whole, to consider extrinsic evidence to determine the parties’ intent. Roats , 169 Wash. App. at 274, 279 P.3d 943. We consider a corporation's governing documents, including articles of incorporation and bylaws, "correlated documents" to be construed together as a whole. Roats , 169 Wash. App. at 274, 279 P.3d 943.

¶ 14 Contractual language generally must be given its ordinary, usual, and popular meaning. Jensen v. Lake Jane Estates , 165 Wash. App. 100, 105, 267 P.3d 435 (2011). "An interpretation of a contract that gives effect to all provisions is favored over an interpretation that renders a provision ineffective." Snohomish County Pub. Transp. Benefit Area Corp. v. FirstGroup Am., Inc. , 173 Wash.2d 829, 840, 271 P.3d 850 (2012). And "[w]here one construction would make a contract unreasonable, and another, equally consistent with its language, would make it reasonable, the latter more rational construction must prevail." Byrne v. Ackerlund , 108 Wash.2d 445, 453-54, 739 P.2d 1138 (1987). Here, the relevant governing documents are the Declarations as amended.

3. Restrictive Covenants

¶ 15 Dehls argues that the governing documents constitute a restrictive covenant. A "restrictive covenant" is an agreement or promise between two or more parties that limits permissible uses of land. See Hollis v. Garwall, Inc. , 137 Wash.2d 683, 690, 974 P.2d 836 (1999) ; RESTATEMENT (THIRD) OF PROPERTY: SERVITUDES § 1.3, at 23 ( AM. LAW INST. 2000). When the covenant "runs with the land," it burdens a particular parcel with the duty of complying with the restriction and benefits of a particular parcel with the right to enforce the restriction. Deep Water Brewing, LLC v. Fairway Res. Ltd. , 152 Wash. App. 229, 257-58, 215 P.3d 990 (2009) ; 17 WILLIAM B. STOEBUCK & JOHN W. WEAVER, WASHINGTON PRACTICE: REAL ESTATE : § 3.2 (2d ed. 2004). "The doctrine of ‘running’ is analogous to the contract doctrines of assignment of rights and delegation of duties; it is a doctrine whereby remote parties are bound or benefited by contractual covenants made by the original parties." 17 STOEBUCK & WEAVER , § 3.2, at 126.

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