Nicholson v. Moon Ridge Homeowners Ass'n

• Decision Date: 31 March 2023
• Docket Number: 22-CV-00627
• Citation: 2023 Vt Super 033101
• Parties: Tracy Nicholson and John Nicholson Plaintiffs v. Moon Ridge Homeowners Association, Inc., Defendant
• Court: Superior Court of Vermont

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2023 Vt Super 033101

Tracy Nicholson and John Nicholson Plaintiffs
v.
Moon Ridge Homeowners Association, Inc., Defendant

No. 22-CV-00627

Superior Court of Vermont, Civil Division, Rutland Unit

March 31, 2023

DECISION ON MOTIONS

Megan J. Shafritz Superior Court Judge

RULING ON PARTIES' MOTIONS FOR SUMMARY JUDGMENT

This case involves disputes over the validity and meaning of a contract. Plaintiffs Tracy and John Nicholson (the "Nicholsons"), owners of a unit of the Moon Ridge condominium development in Killington, seek a declaratory judgment regarding an amendment to the Moon Ridge declaration of condominium addressing the use of Moon Ridge lands for a planned wastewater system. The association of unit owners, Defendant Moon Ridge Homeowners Association, Inc. (the "Association"), asserts that the amendment is void for lack of consideration, and alternatively brings counterclaims for declaratory relief of its own regarding the amendment. The Association also asserts a claim for damages against the Nicholsons under 13 V.S.A. § 3606 for timber trespass. Plaintiffs are represented by Frank P. Urso, Esq. Defendant is represented by Rodney E. McPhee, Esq. Pursuant to Rule 56 of the Vermont Rules of Civil Procedure, the parties have moved for summary judgment as to the other side's claims. For the reasons discussed below, Plaintiffs' motion is GRANTED IN PART and DENIED IN PART and Defendant's motion is DENIED.

Factual and Procedural Background

The following facts are not in dispute for purposes of the parties' pending motions:

A common interest community, known as "Moon Ridge," was established in 1979 pursuant to a Declaration of Condominium Ownership made by the developer, Moon Ridge Corporation. See Pls.' SUMF, ¶ 2; Def's Resp. to SUMF, ¶ 2. The development was designed and plotted to consist of several residential buildings, positioned adjacent to a circular roadway or loop. See Kesselring Aff. (Jun. 6, 2022), ¶¶ 6-8 &attachment. The design also included ten discrete, rectangular-shaped plots of land, arrayed in a roughly circular pattern to the outside of the roadway, and designated them as locations for septic leach fields. See id. (fields enumerated

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in Roman, I-X); Pls.' Ex. AA.^[1] As built, the Moon Ridge residences utilized a number of these leach field plots but left at least three of them unused. See Def.'s SUMF In Support of CrossMotion, ¶ 17; Pls.' Ex. AA (indicating that there were ten fields, each with ten-bedroom capacity, designed and plotted; six were made operational and are in use; one held unused for emergency; three meant for an additional phase of Moon Ridge units).

However, at some point a new, freestanding residence was built in the Moon Ridge development on vacant land adjacent to the same circular roadway serving the Moon Ridge condos. See Pls.' Ex. AA; Def.'s Ex. C; Pls.' Ex. 1 to Reply Mem.; Def.'s SUMF, ¶ 5. This house was apparently constructed on lands then designated as common lands, but before the development rights to such land had been conveyed out to the Association. See Pls.' Ex. AA; Def.'s SUMF, ¶ 5. In any event, there is no question that the Association became (and still is today) the sole owner of the real property underlying this particular residence. See Def.'s SUMF, ¶ 13; Pls.' Resp. to SUMF, ¶ 13. The septic line from this residence was connected to a septic line running from a Moon Ridge residential building (Building 6) to an operational leach field that had capacity to serve three more bedrooms. See Def.'s SUMF, ¶ 5; Pls.' SUMF, ¶¶ 89. The residence came to be owned by the Kelly family, although it was not made part of the condo complex. Def.'s SUMF, ¶ 6; Pl.'s Ex. AA.

At least as early as the early 2010s, when the Kellys began to try to sell their home, they learned that financial institutions would not finance a potential purchase, given the nature of ownership - i.e., where a mortgage would be secured by a residence that was not a part of a condominium and located on land owned in common by a condominium association. See Def.'s SUMF, ¶ 7; Pls.' Resp. to SUMF, ¶ 7. Thus, to make the residence marketable, the Kellys retained legal counsel to craft a solution. See Def.'s SUMF, ¶ 8; Pls.' Resp. to SUMF, ¶ 8. The Kellys' attorney drafted an amendment to the Declaration concerning the residence, which was unanimously approved by the member-owners of the Association on September 23, 2014. See Def.'s SUMF, ¶ 8; Pls.' Resp. to SUMF, ¶ 8; Pls.' SUMF, ¶ 5; Def.'s Resp., ¶ 5.

This amendment, which is at the heart of the case, provides that the Kelly residence "is hereby made subject to the [Moon Ridge] Declaration and shall create in the owner or owners of such unit a fee simple absolute ownership of the individual unit and [a] percentage interest in common with owners of all other units in the common areas, common elements and limited common areas." Pls.' Ex. C in Supp. of Mot. for Partial Summ. J. The residence will be designated "Unit 7A" of Moon Ridge, and its owners will have an undivided 9% ownership interest in the common areas and elements of the condominium. (The amendment thus became known as the "7A Amendment.") In exchange, the owners of Unit 7A agreed to pay a share of that portion of the Association's annual assessment and fees attributable to budget items or matters that pertain to the condominium common areas, elements, or functions. Id.

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Under a separate paragraph, the 7A Amendment included an option pertaining specifically to septic system matters, as follows:

7. If allowed by the state and local government permitting process, Unit 7A has the right to detach its septic system from the Moon Ridge septic system and construct a standalone leach field for the exclusive use of Unit 7A

(i) The cost to construct, detach and maintain (indefinitely from the detachment date forward without regard to subsequent sale(s) of Unit 7A) and obtain any necessary state and local government approvals and permits will be paid for by Unit 7A exclusively.

(ii) The leach field can be completed as already plotted or subsequently amended on land adjacent to Unit 7A or on land adjoining Moon Ridge land which is owned by Unit 7A owners. The leach field, if constructed as described herein, must be naturally buffered from reasonable general view in a manner consistent with the buffering of the existing Association leach field(s).

(iii) In the event Unit 7A chooses to disconnect its septic system from Moon Ridge, any cost currently considered in Schedule 1 for septic maintenance, operation, repair, liability will be removed from future calculations and assessments. Any mid-year separation will be retroactively prorated based upon days prior to separation (with any unused portion subject to section 5 above).

(iv) On the date separated, and after approval by all state and local governing agencies, Unit 7A will be released by the Association and Lien holders of any liability for any future maintenance, repair or capital requirements of any nature of the existing Moon Ridge fields, system, equipment, and the like, (Schedule 1 will be adjusted to reduce the fees related to septic accordingly) and the Declaration amended, if necessary, at Unit 7A's expense without further notice requirement to the Unit or Lien holders of Moon Ridge but with notice to the Association Board of Directors. Unit 7A will assume full responsibility for maintenance and repair of the field, system, equipment, and the like associated with the separate system serving Unit 7.

Pls.' Ex. C. The next paragraph indicates that "[a]ny fines and/or expenses incurred by Unit 7A for failure to follow mandated septic system pumping and maintenance will be paid in full by Unit 7A....[and] Unit 7A will indemnify the Association for same including attorney's fees and costs incurred in collecting same." Id. These and all other financial obligations on Unit 7A were made enforceable by way of Association liens, as well as rights of foreclosure and collection of costs held by the Association. Id.

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In November 2014, the Nicholsons purchased Unit 7A from the Kellys, along with a nearby land parcel owned by the Kellys, but not the land on which the residence sits. On June 2, 2020, Plaintiff Tracy Nicholson sent an email message to Ron Riquier, a member of the Association's Board of Directors, as follows:

Thanks for coordinating on the septic inspection. I have been worrying about the on going issues with the leach field we share with building 6. We would love to explore whether it might be feasible for us to build our own leach field either on our property or on the bottom of the hill in front of our house on [M]oon [R]idge property. If we were to do this, it would be cleaner if it was on property we own. I know the Kellys had previously looked into buying the land from the condo that the house is on. I am wondering if revisiting a land sale (swap?) would be of interest to you and the condo. Let me know if you would like to discuss live or if this is not of interest. Even if we were to purchase the land and separate from the condo we would still love to be able to use recycling and trash as well as contribute to the electric for the entrance to the loop.

Def.'s Ex. A. On June 3, 2020, Riquier responded by giving Nicholson his understanding of the history leading to the adoption of the 7A Amendment. He stated, among other things, that three designated but unused leach fields (enumerated 8, 9, and 10) were designed for a next phase of Moon Ridge units that were never actually built, and that another field (No. 1) was intentionally kept unused as an emergency back-up. See Pls.' Ex. AA. Nicholson responded the same day with a message that included the following:

The most obvious space for a field would seem to be the bottom of the lawn in front of the house (current Moon Ridge property) although you

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