Lake Limerick Country Club v. Hunt Mfg. Homes, Inc.
| Decision Date | 18 February 2004 |
| Docket Number | No. 29774-4-II.,29774-4-II. |
| Citation | 84 P.3d 295,120 Wn. App. 246,120 Wash. App. 246 |
| Court | Washington Court of Appeals |
| Parties | LAKE LIMERICK COUNTRY CLUB, a Washington not-for-profit corporation, Respondent, v. HUNT MFG. HOMES, INC., a Washington corporation, Appellant. |
Robert Dryden Wilson-Hoss, Attorney at Law, Shelton, WA, for Respondent.
James Philip Kintner, Kintner Law Group Inc PS, Poulsbo, WA, for Appellant.
The primary questions in this appeal are (1) whether a Declaration of Restrictions is enforceable against the land it describes, and (2) whether a Declaration of Restrictions, when "correlated"1 with the articles and bylaws of a homeowners' association, can render a member of the association personally liable for dues accruing during its membership. The trial court answered yes to both questions, and so do we. Accordingly, we affirm.
In the mid-1960s, Lake Limerick Associates (LLA) developed about 1300 residential lots in Mason County. It also incorporated a homeowners' association called Lake Limerick Country Club, Inc. (LLCC). LLCC had articles and bylaws at all times pertinent here.
On December 20, 1967, LLA recorded a "Declaration of Restrictions" that provided in part as follows:
Even before LLA recorded this Declaration of Restrictions, it filed LLCC's Articles of Incorporation with the Secretary of State. Insofar as pertinent here, those Articles said that LLCC's purposes were (1) "[t]o enforce assessments, liens, charges, restrictions, conditions and covenants existing upon and/or created for the benefit of parcels of real property in the plat or added to the plat of Lake Limerick Country Club, Inc."; and (2) "[t]o fix, establish, levy and collect annually such charges and/or assessments as may be necessary in the judgment of the board of trustees, to carry out any or all of the purposes for which this corporation is formed, but not in excess of the maximum from time to time fixed by the By-Laws."3
At least by 1998, LLCC's bylaws provided that each of its members was responsible to pay annual membership dues. The bylaws stated:
In addition, the amount of any dues or assessments not paid pursuant to the terms for payment set forth by the Board of Trustees, as well as all expenses, attorney fees and costs, including title search and certificate costs, reasonably incurred in enforcing and collecting judgments for the same shall be a lien upon the land assessed and the membership appurtenant thereto, superior to any and all other liens created or permitted by the owner of such land, and enforceable by foreclosure proceedings in the manner provided by law for foreclosure of mortgages upon land or non-judicial foreclosure of deeds of trust, at the option of the Board of Trustees; provided, that no proceedings for the foreclosure of any said liens in this Article VIII provided, shall be commenced except upon the expiration of four months from and after the day of mailing said notice of dues and/or assessment in this section described. Deficiency judgments in such foreclosure proceedings are specifically authorized.[4]
In early 2000, LLCC was owed a substantial amount of homeowners' dues on Lot 53. On February 28, 2000, Hunt Manufactured Homes, Inc., a Washington corporation, acquired title to that lot. Hunt did not pay all the dues, costs, and fees that were then outstanding. Nor has it paid all the dues, costs, and fees that since have accrued. For convenience, we will refer to dues, costs, and fees simply as "dues."
In October 2001, LLCC sued for the dues owed on Lot 53. It alleged that Lot 53 should be held liable for all such dues and that Hunt should be held personally liable for dues accruing after it had acquired the lot (i.e., for dues accruing after February 28, 2000).
In October 2002, the trial court heard cross-motions for summary judgment. After finding that unpaid dues had accrued both before and after February 28, 2000, it entered judgment against Lot 53 for the total amount of such dues, and judgment against Hunt personally for the portion of such dues that had accrued after February 28, 2000. It ruled that a lien secured all such dues, that the lien should be foreclosed, and that the lot should be sold. It ordered that the proceeds of sale be applied first to dues assessed only against the lot and that LLCC receive a deficiency judgment against Hunt for the remaining balance, if any, of dues assessed against Hunt personally. It awarded costs and reasonable attorney fees against the lot and a major portion of those costs and fees against Hunt personally.5
Hunt now appeals. It claims that homeowners' dues should not have been charged against Lot 53 because the obligation to pay them did not "run with the land." It also claims that it should not have been held personally liable for such dues because it never contracted to pay them. Finally, it claims that the trial court awarded an amount of dues that was "unconscionable" and an amount of attorney fees that was not reasonable.
The first issue is whether the Declaration of Restrictions gave rise to a covenant running with the land. If it did, Lot 53 is liable for unpaid homeowners' dues accruing both before and after February 28, 2000. If it did not, Lot 53 is not liable for homeowners' dues.
Covenants running with the land are useful "because they create land-use arrangements that remain intact despite changes in ownership of the land."6 They "permit the creation of neighborhoods restricted to particular uses, providing a private alternative to zoning; they permit property to be used as a basis for financing infrastructure, providing a private alternative to taxation; and they permit the creation of stable arrangements for shared use of land, providing an alternative to acquisition of fee-simple interests for transportation corridors and natural-resource exploitation."7 They may have other uses also.
In discussing such covenants, we pattern our terminology after that of the Restatement Third, Property (Servitudes) (hereafter "Restatement"). A servitude is a legal device that creates a right or obligation that runs with the land.8 A servitude can be, among other things, an easement, profit, or covenant.9 A covenant is a servitude if either its benefit or its burden runs with the land.10 When a covenant is a servitude, it may equivalently be described as either a "servitude" or "a covenant running with the land."
In the past, some courts—usually not including Washington's11—have distinguished between a "real covenant" that runs with the land and an "equitable covenant" (sometimes called an "equitable servitude" or "equitable restriction") that runs with the land.12 Today however, the Restatement sensibly explains:
[T]he differences between covenants that historically could be enforced at law and those enforceable in equity ... have all but disappeared in modern law. Continuing use of the dual terminology of real covenant and equitable servitude is confusing because it suggests the continued existence of two separate servitude categories with important differences. In fact, however, in modern law there are no significant differences. Valid covenants, like other contracts and property interests, can be enforced and protected by both legal and equitable remedies as appropriate, without regard to the form of the transaction that created the servitude.[13]
Even though the Washington courts have not generally distinguished between "real covenants" and "equitable restrictions,"14 the Washington Supreme Court has formulated the elements of a servitude in two ways. It has said that a "real covenant" runs with the land if the following conditions are met:
(1) the covenant[ ] must have been enforceable between the original parties, such enforceability being a question of contract law except insofar as the covenant must satisfy the statute of frauds; (2) the covenant must "touch and concern" both the land to be benefitted and the land to be burdened; (3) the covenanting parties must have intended to bind their successors in interest; (4) there must be vertical privity of estate, i.e.,...
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...principle of justice that no one should be unjustly enriched at the expense of another.’ ” Lake Limerick Country Club v. Hunt Mfg. Homes, Inc., 120 Wash.App. 246, 261, 84 P.3d 295 (2004) (quoting Milone, 49 Wash.2d at 367, 301 P.2d 759). Unjust enrichment, thus, is the method of recovery fo......
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...is based on the principle that no one should be unjustly enriched at the expense of another. Lake Limerick Country Club v. Hunt Manufactured Homes, Inc., 120 Wash.App. 246, 261, 84 P.3d 295 (2004). Although a quasi-contract case invokes equitable principles, it is a legal action, and the re......
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...that runs with the land" that "can be, among other things, an easement, profit, or covenant." Lake Limerick Country Club v. Hunt Mfd. Homes, Inc ., 120 Wash. App. 246, 253, 84 P.3d 295 (2004) (citing 1 RESTATEMENT (THIRD) OF PROPERTY: SERVITUDES § 1.1(1), (2), at 8 ( AM. LAW INST. 2000) ) (......
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