Lee v. Puamana Community Ass'n

• Decision Date: 23 February 2006
• Docket Number: No. 24265.,24265.
• Citation: 128 P.3d 874
• Parties: Allan LEE, Barbara Lee, Shirley Wetzel and Scott Donovan, Plaintiffs/Counterclaim Defendants-Appellees v. PUAMANA COMMUNITY ASSOCIATION and Board of Directors of the Puamana Community Association, Defendants-Appellants and John Does 1-100, Jane Does 1-100 Doe Partnerships 1-100, Doe Corporations-100, Doe Members of the Board of Directors 1-100, and Doe Puamana Committee Members 1-100, Defendants.
• Court: Hawaii Supreme Court

128 P.3d 874

Allan LEE, Barbara Lee, Shirley Wetzel and Scott Donovan, Plaintiffs/Counterclaim Defendants-Appellees v. PUAMANA COMMUNITY ASSOCIATION and Board of Directors of the Puamana Community Association, Defendants-Appellants and John Does 1-100, Jane Does 1-100 Doe Partnerships 1-100, Doe Corporations-100, Doe Members of the Board of Directors 1-100, and Doe Puamana Committee Members 1-100, Defendants.

No. 24265.

Supreme Court of Hawai`i.

February 23, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Lissa H. Andrews, Honolulu, and Eric T. Krening of Andrews & Yamamoto, on the briefs, for defendants-appellants Puamana Community Association and Board of Directors of the Puamana Community Association.

Myles T. Yamamoto and Terrance M. Revere, Honolulu, of Motooka Yamamoto & Revere, on the briefs, for plaintiffs, counterclaim defendants-appellees Allan Lee, Barbara Lee, Shirley Wetzel and Scott Donovan.

MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, and DUFFY, JJ.

Opinion of the Court by NAKAYAMA, J.

Defendant-appellants, Puamana Community Association and Board of Directors of the Puamana Community Association [hereinafter collectively referred to as "Appellants"], appeal from the second circuit court's April 19, 2001 judgment in favor of plaintiff-appellees, Allan Lee, Barbara Lee, Shirley Wetzel, and Scott Donovan [hereinafter collectively referred to as "Appellees"], filed pursuant to Hawai`i Rules of Civil Procedure [hereinafter "HRCP"] Rule 54(b) (2001).¹

On appeal, Appellants contend that the circuit court erred by granting Allan and Barbara Lee's [hereinafter the "Lees"]² April 7, 2000 "Motion for Partial Summary Judgment Regarding Transfer of Common Elements to Private Use," inasmuch as: (1) the circuit court improperly applied condominium law and concepts to Puamana, a planned community association governed by Hawai`i Revised Statutes [hereinafter "HRS"] chapter 421J; (2) planned community associations have the right to amend their documents; (3) there is no evidence that the amendment to the governing documents would adversely affect individual unit owners; and (4) courts uphold amendments to governing documents, including amendments which affect the ownership rights of the individual unit owners. Appellants also assert that the circuit court erred by denying their motion for reconsideration. Finally, Appellants contend that if this court should determine that the circuit court did not err by granting Appellees' motion for partial summary judgment, the circuit court's July 5, 2000 order requires clarification inasmuch as (1) the order is unclear as to whether or not it grants injunctive relief, and (2) if the circuit court's order is construed as awarding injunctive relief, the order is procedurally defective insofar as it violates the requirements set forth in HRCP Rule 65 (2000).

Based on the following analysis, we vacate the circuit court's April 19, 2001 judgment, inasmuch as the Lees failed to demonstrate that there was no genuine issue of material fact for trial and that they were entitled to judgment as a matter of law.

I. BACKGROUND

A. Factual Background

Puamana was established in 1968 as a Hawai`i non-profit corporation governed by the April 29, 1968 "Declaration of Covenants, Conditions and Restrictions" [hereinafter "CC & Rs"], recorded in the Bureau of Conveyances of the State of Hawai`i [hereinafter "BOC"] on May 8, 1968. Puamana occupied approximately thirty acres of land and consisted of approximately two-hundred and thirty subdivided units, in addition to common areas owned by Puamana. Each individual unit owner was a member of Puamana, and each owner's interest was subject to the "easements, restrictions, covenants, conditions, charges and liens ... set forth in [the] [CC & Rs]." (Ellipses added.) (Brackets added.)

Although the CC & Rs contemplated that owners shall construct their private residences within the boundaries of their respective units, several owners constructed "pop outs" that encroached onto the common areas owned by Puamana. The term "pop out" refers to an expansion of the dwelling by which the exterior walls are pushed out toward the area beneath the eaves of the building structure. The Board of Directors of Puamana [hereinafter "Board"] initially assumed that the "pop outs" remained within the boundaries of the respective units because they did not protrude beyond the drip lines of the eaves. However, the Board subsequently discovered that the unit boundaries coincided with the original position of the exterior walls of the dwellings and that the "pop outs" encroached onto the common areas even though they remained under the eaves.

Dale W. Hillman [hereinafter "Hillman"] was one of the unit owners desiring to construct a "pop out," and he proposed to extend nearly all of his sixty-six-foot exterior wall two and one-half feet outward towards the eaves, creating an additional one-hundred and sixty-five square-feet of floor space. The Board rejected Hillman's proposal unless and until the CC & Rs could be amended to expressly permit encroachments onto the common areas. Subsequently, Puamana Community Association [hereinafter "Association"] and Hillman agreed to jointly submit cross-motions to the circuit court for a declaratory ruling as to whether the Board had the authority, without amending the existing CC & Rs, to allow such encroachments. On October 6, 1999, the court filed an order granting the Association's motion for declaratory relief, ruling that the CC & Rs, as written, did not authorize the Board to permit encroachments onto the common areas. As a result, on October 19, 1999, the Board recorded a document entitled "Amendment of Puamana Declaration, Covenants, Conditions and Restrictions" [hereinafter "amended CC & Rs"] in the BOC. The amended CC & Rs purported to authorize the Board to approve "minor encroachments" of up to two-hundred square-feet per unit. The record indicates that the amendment was validly executed pursuant to the amendment procedure set forth in the CC & Rs.

B. Procedural Background

The present proceedings arise from an October 28, 1999 complaint, filed by the Lees in response to the amended CC & Rs. The Lees alleged, among other things, that Appellants "wrongfully and deliberately attempted to transfer and in fact have transferred portions of the common elements or interest of the Puamana to individual unit owners in violation of Hawai[']i law and the project documents[.]"³ (Brackets added.) The Lees prayed for, inter alia, injunctive relief as well as general, special, and punitive damages. Appellants filed their answer to the Lees' complaint on December 27, 1999.

Subsequently, on April 7, 2000, the Lees filed a "Motion for Partial Summary Judgment Regarding Transfer of Common Elements to Private Use." The Lees specifically alleged that they were entitled to partial summary judgment insofar as: (1) the Board could not rely on the amended CC & Rs to transfer common elements to individual owners because such action violated county requirements; (2) the Board could not divest property rights in the common areas that were expressly conveyed by deed; (3) Appellants were judicially estopped from asserting that they were permitted to "give away" the Lees' property interests; (4) Appellants essentially conveyed portions of the common area to individual owners for private use and thus violated the principles set forth in Penney v. Ass'n of Apartment Owners of Kaanapali, 70 Haw. 469, 776 P.2d 393 (1989); and (5) the effect of the amended CC & Rs was not "minor" because the amended CC & Rs authorized the Board to "convey" up to forty-six-thousand square feet (nearly one acre) of the common area.

In response, on May 11, 2000, Appellants filed a memorandum in opposition to the Lees' motion for partial summary judgment. Appellants contended that the Lees were not entitled to partial summary judgment insofar as: (1) the circuit court lacked jurisdiction because HRS § 421J-13(a) (Supp.1997)⁴ required that the matter be first submitted to mediation; (2) in the prior proceeding between the Association and Hillman, the Honorable E. John McConnell ordered the Association to make a good faith effort to amend the CC & Rs so as to permit encroachments onto the common areas; (3) the Lees had no admissible evidence in support of their allegation that Appellants' actions violated county requirements; (4) the Lees misconstrued the Association's arguments in the prior proceeding between the Association and Hillman [hereinafter "the Hillman action"], and thus the Lees' invocation of the construct of judicial estoppel was without merit; and (5) the unit owners' interests in the common areas were clearly subject to the CC & Rs and the amended CC & Rs.⁵

On May 18, 2000, the circuit court held a hearing on the Lees' motion for partial summary judgment. Without specifying any particular basis for its decision, the circuit court orally granted the Lees' motion. On July 5, 2000, the circuit court filed an order granting the Lees' motion for partial summary judgment.

On July 18, 2000, Appellants filed a motion for reconsideration. Appellants argued that they were entitled to relief inasmuch as: (1) the order violated HRS § 421J-13; (2) the order directly contradicted Judge McConnell's order; (3) the Lees' warranty deed was subject to the CC & Rs and amended CC & Rs; (4) the Association properly amended the CC & Rs so as to permit minor encroachments onto the common areas; (5) courts have upheld amendments to governing documents, including amendments which affect ownership rights of the individual unit owners; (6) complete and correct copies of the declaration and amended declaration were not submitted with Appellants' memorandum in opposition;⁶ (7) the Lees failed to provide any evidence that the encroachments violated the Maui County Code [hereinafter "MCC"]; (8) Puamana was not a condominium property regime and therefore Penney did not...