Montgomery v. 232511 Invs., Ltd.

• Decision Date: 17 April 2012
• Docket Number: No. 11–188.,11–188.
• Citation: Montgomery v. 232511 Invs., Ltd., 49 A.3d 143, 2012 VT 31 (Vt. 2012)
• Parties: Sandra and Roger MONTGOMERY, Mary and Christopher Lintermann and Lorig and Sevan Yekhpairian, et al. v. 232511 INVESTMENTS, LTD. and Stowe Club Owners Association.
• Court: Vermont Supreme Court

49 A.3d 143

2012 VT 31

Sandra and Roger MONTGOMERY, Mary and Christopher Lintermann and Lorig and Sevan Yekhpairian, et al.

v.232511 INVESTMENTS, LTD. and Stowe Club Owners Association.

No. 11–188.

Supreme Court of Vermont.

Motion for Reargument Denied May 11, 2012.

April 17, 2012.

Present: REIBER, C.J., SKOGLUND, BURGESS, ROBINSON, JJ. and EATON, Jr., Superior Judge, Specially Assigned.

ENTRY ORDER

¶ 1.Defendant232511 Investments, Ltd., the owner of a planned unit development in the Town of Stowe, appeals from separate superior court orders invalidating certain amendments to the development's declaration of covenants, conditions, and restrictions and awarding attorney's fees to plaintiffs, the owners of individual lots within the development.Defendant contends principally that the trial court erred in: (1) failing to dismiss the action on the basis of collateral estoppel; (2) finding that the amendments were unreasonable; and (3) granting plaintiffs' request for attorney's fees under the Common Interest Ownership Act and denying its request for attorney's fees under the declaration.We affirm.

¶ 2.This is the latest in a series of appeals arising from efforts by defendant, doing business as Stowe Highlands, to construct a number of additional single-family homes in its Stowe Club development in place of a previously planned resort hotel.In In re 232511 Investments, Ltd.,2006 VT 27, 179 Vt. 409, 898 A.2d 109, we affirmed a decision of the environmental court denying Stowe Highlands's 2003 application to allow the construction under its current permit for a mixed-use Resort Planned Unit Development (Resort PUD), holding that it had to convert to a single-use Planned Residential Development (PRD) if, as we explained in a subsequent appeal, “it wanted to replace the proposed hotel that was to be the centerpiece of the development” with single-family homes.In re Stowe Highlands Resort PUD to PRD Application,2009 VT 76, ¶ 2, 186 Vt. 568, 980 A.2d 233(mem.).We also held that “such application must include the entire 236–acre parcel” and not just the remaining undeveloped parcels, but declined to address—as premature—whether it “had sufficient control” of the development to apply for the conversion when a number of lots within the development had been sold to individual homeowners.Id.

¶ 3.Contemporaneous with its zoning application, Stowe Highlands filed an action for declaratory relief in the superior court against the Stowe Club Owners' Association and various individual homeowners, seeking a declaration that it was entitled to unilaterally amend the Declaration to add the so-called Tenth Supplement, which authorized it to develop individual homes instead of a hotel and to “convert the land to a PRD as opposed to a Resort PUD.”The trial court dismissed the action on the ground that it presented no justiciable controversy, finding “no evidence ... that Defendants have or plan to take any action against [Stowe Highlands'] rights [to amend or supplement] the Declaration,” and this Court affirmed on that basis.Stowe Highlands v. Stowe Club Owners' Ass'n,No.2005–406, 2006 WL 5849652, at *2(Vt.June 30, 2006)(unpub.mem.).

¶ 4.Stowe Highlands thereafter submitted two applications to the town to convert from a Resort PUD to a PRD.The first, submitted in May 2006, was denied by the town and the environmental court on the ground that Stowe Highlands had not demonstrated “the degree of control over the entire parcel necessary to be the sole applicant.”In re Stowe Highlands,2009 VT 76, ¶ 3, 186 Vt. 568, 980 A.2d 233.No appeal was taken from this ruling.Instead, Stowe Highlands filed a second application purporting to represent the entire development by virtue of another amendment to the Declaration that it adopted in December 2006, the so-called Twelfth Supplement, in which it granted to “itself the right on behalf of all of the 236+/-acre Stowe Club Property Land, lot or unit owners to apply for any and all necessary permits to change and convert the Land from a Resort Planned Unit Development to a Planned Residential Development.”

¶ 5.The town denied the second application on the same ground, concluding that “even with the Twelfth Supplement Stowe Highlands did not demonstrate the authority to make changes to lots and other land in the existing Resort PUD that it does not own and which the [DRB] may require.”Id.¶ 5.The environmental court agreed, and this Court affirmed, holding that “control over the entire parcel” was the critical issue and that “nothing in the Twelfth Supplement, even if valid, gives Stowe Highlands the requisite level of control over lands that have already been sold and developed.”Id.¶ 10.While noting that the parties“dispute[d] the validity of the [Twelfth Supplement],”we found that its validity was immaterial to our decision.Id.¶ 4 n. 2.

¶ 6.The validity of the Twelfth Supplement, as well as that of the Tenth, was the subject, however, of this lawsuit.Filed by plaintiffs in April 2007, the complaint sought a declaration that both supplements, as well as several additional supplements relating to certain assessments and sewer-system regulations, were invalid and unenforceable.Stowe Highlands answered, filed a counterclaim asserting the validity of the disputed provisions, and also filed a third-party complaint against the Stowe Club Owners Association.The trial court denied Stowe Highlands's motion to dismiss based on a claim of collateral estoppel, and subsequently heard oral argument on the parties' cross-motions for summary judgment.While the matter was pending, Stowe Highlands and the Owners Association entered into a stipulation dismissing the third-party complaint and agreeing to the terms of a Thirteenth Supplement, which provided, among other things, that the Tenth and Twelfth Supplements were “voided.”The court adopted the stipulation as a final order on September 30, 2009.

¶ 7.Shortly thereafter, the court issued a written ruling on the cross-motions for summary judgment.The court again rejected Stowe Highlands' assertion of claim preclusion, found the disputed sewer supplements to be a reasonable exercise of authority under the Declaration, and ruled that the Tenth and Twelfth Supplements were unreasonable and unenforceable as a matter of law.¹Relying on the previously entered stipulation and order, Stowe Highlands later moved to dismiss the complaint under V.R.C.P. 41.The trial court denied the motion, observing that the rule did not provide a mechanism to dismiss after a summary judgment ruling.The court issued a final judgment in January 2010, and thereafter entered a separate decision and order on the parties' respective requests for attorney's fees.The court concluded that, having prevailed on their challenge to the Tenth and Twelfth Supplements, plaintiffs were entitled to attorney's fees under the Common Interest Ownership Act, 27A V.S.A. § 4–117(a), and awarded fees totaling $73,455.10.The court rejected Stowe Highlands' request for attorney's fees under the Declaration.This appeal followed.

¶ 8.Stowe Highlands asserts that the trial court erred in finding that the Tenth and Twelfth Supplements were unreasonable and unenforceable as a matter of law, in rejecting its claim that plaintiffs were collaterally estopped from challenging the supplements, and in otherwise finding no genuine issue of material fact concerning the validity of the supplements.In light of the stipulation and order, however, we conclude that the claims are moot.As noted, the trial court entered an order incorporating the settlement and the terms of the so-called Thirteenth Supplement, which provided, in part, that the Tenth and Twelfth Supplements were “hereby voided and superseded by [the] Thirteenth Supplement.”The Thirteenth Supplement contains none of the disputed provisions of the Tenth and Twelfth that purported to authorize Stowe Highlands to convert the property to a PRD and to apply unilaterally for the necessary zoning permits.Although the individual-owner plaintiffs were not parties to the stipulation, there is no dispute that the Tenth and Twelfth Supplements are now void.Thus any ruling by this Court can have no effect on the viability of the disputed supplements themselves.Accordingly, the claims on appeal challenging the supplements are moot.SeeChase v. State,2008 VT 107, ¶ 11, 184 Vt. 430, 966 A.2d 139(“[A]n issue becomes moot if the reviewing court can no longer grant effective relief.”(quotation omitted)).

¶ 9.Stowe Highlands also appeals the attorney's fee award, which was based largely on the trial court's finding that plaintiffs had prevailed in their challenge to the Tenth and Twelfth Supplements.In light of the settlement and order voiding the disputed supplements, a question arises at the outset as to whether plaintiffs may be said to have “prevailed” on the merits.In Kirchner v. Giebink,155 Vt. 351, 352, 584 A.2d 1120, 1121(1990), the plaintiffs' claims became moot when the defendants unilaterally amended the development agreement at issue.We held, nevertheless, that the plaintiffs were entitled to attorney's fees under 42 U.S.C. § 1988 even where they did not prevail “by direct judicial action as long as they were the catalyst for the relief.”To meet this requirement, plaintiffs must “establish that their suit was causally related to the defendants' actions which improved their condition,” and that their claims had a “colorable or reasonable likelihood of success on the merits.”Id. at 353–54, 584 A.2d at 1122(quotation omitted).

¶ 10.More recently, in Merriam v. AIG Claims Services, Inc.,2008 VT 8, ¶ 15, 183 Vt. 568, 945 A.2d 882(mem.), we noted that the “catalyst” theory on which Kirchner relied has since been rejected by the U.S. Supreme Court in Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources,532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855(2001).In ...