Perfect Place, LLC v. Semler

• Decision Date: 17 September 2018
• Docket Number: Supreme Court Case No. 17SC115
• Citation: 426 P.3d 325
• Parties: PERFECT PLACE, LLC, a Colorado limited liability company, Petitioner, v. R. Parker SEMLER, Respondent.
• Court: Colorado Supreme Court

426 P.3d 325

PERFECT PLACE, LLC, a Colorado limited liability company, Petitioner,

v.R. Parker SEMLER, Respondent.

Supreme Court Case No. 17SC115

Supreme Court of Colorado.

September 17, 2018

Attorneys for Petitioner: Mary Ewing Law Offices, PC, A. Craig Fleishman, Englewood, Colorado

Attorneys for Respondent: Semler & Associates, P.C., R. Parker Semler, Andrew Oh-Willeke, Jeremy Goldblatt, Denver, Colorado

En Banc

JUSTICE MÁRQUEZ delivered the Opinion of the Court.

¶ 1 This quiet title action requires us to determine whether the owner of a garage condominium unit can validly subdivide that unit under section 38-33.3-213, C.R.S. (2018) of the Colorado Common Interest Ownership Act ("CCIOA") by merely painting or marking lines on the garage wall, and thereafter separately convey the spaces thus marked as individual condominium parking units. Petitioner Perfect Place, LLC ("Perfect Place") asserts ownership of three parking spaces (spaces "C, D, and E") in a mixed-use residential and commercial building located at 1940 Blake Street, Denver, Colorado (the "Building"). Respondent R. Parker Semler contends that he owns spaces C and D.

¶ 2 According to the declaration in the record before us, the Building consists of twelve condominium units. These condominium units consist of ten apartments and offices, and two vehicle parking units located in the Building's garage. As listed in the declaration, Unit G—C/D/E (the "Garage Unit") is a single 400-square-foot vehicle parking unit containing three parking spaces: C, D, and E.¹ The dimensions of these parking spaces are not marked or otherwise discernible from the declaration or accompanying map.

¶ 3 In 2000, Quail Street Company ("Quail Street") obtained a majority of the Building's condominium units, including the Garage Unit, from the original owner. Quail Street's manager and sole shareholder, John Watson, later physically marked the boundaries of spaces C, D, and E with paint or tape, purportedly subdividing the Garage Unit into three individual units that could be separately conveyed. However, there is no evidence that Watson ever recorded any amendment to the declaration reflecting the subdivision of the Garage Unit, as required by section 38-33.3-213 of CCIOA, which governs the subdivision of units. Watson later transferred his interests in spaces C and D to different buyers; those buyers later transferred their interests to others, including Semler.

¶ 4 In June 2013, Perfect Place filed a quiet title action, asserting superior title to spaces C, D, and E based on a quitclaim deed it obtained from Watson in 2011 (the "2011 Quitclaim Deed") that purportedly conveyed the Garage Unit as a single, undivided condominium unit. Although the individual spaces C, D, and E had been conveyed to other owners, Perfect Place contended that these conveyances were invalid because Watson had never validly subdivided the Garage Unit. Perfect Place thus claimed title to all three parking spaces, contending that the 2011 Quitclaim Deed it obtained from Watson was the only valid conveyance of the Garage Unit.

¶ 5 In response, Semler asserted that the Garage Unit had been properly subdivided into separate units. Semler claimed superior title to spaces C and D based on deeds that conveyed these spaces to him as individual units. He further argued that Perfect Place obtained the 2011 Quitclaim Deed from Watson through fraudulent misrepresentations.

¶ 6 After a three-day bench trial, the trial court held that the Garage Unit was properly subdivided into three units, either because the Building's original owner had already subdivided the Garage Unit at the time it filed the declaration, or because Watson validly subdivided the Garage Unit by physically marking off the separate spaces. The court further held that the 2011 Quitclaim Deed was procured through fraud and unclean hands, and that Semler was the rightful owner of parking spaces C and D. The court ordered that the declaration be amended to reflect that the condominium was divided into fourteen units and adopted an amended map depicting the boundaries of the parking spaces C, D, and E. Relevant here, the map adopted by the court attempted to make space E more usable by enlarging it, which reduced the size of space D. The court denied Semler's request for attorney fees.

¶ 7 Perfect Place appealed the trial court's judgment as to the ownership of spaces C and D. Semler cross-appealed the trial court's enlargement of space E at the expense of space D and the trial court's denial of his request for attorney fees.

¶ 8 In a unanimous published decision, the court of appeals affirmed the trial court's conclusion that the Garage Unit was properly subdivided and that Semler owned spaces C and D. Perfect Place v. Semler, 2016 COA 152M, ¶ 2, 428 P.3d 577, as modified on denial of reh'g (Jan. 12, 2017). Relevant here, the court of appeals held that section 38-33.3-213 of CCIOA governing the subdivision of condominium units required only substantial compliance, and that Watson substantially complied with these provisions and therefore accomplished a valid subdivision of the Garage Unit. Id. at ¶¶ 1, 22–44. The court of appeals further determined that the trial court properly declared the 2011 Quitclaim Deed void, because Perfect Place procured it by "fraud in the factum" by misrepresenting to Watson that the deed was intended merely to correct technical defects in title. Id. at ¶¶ 57–61. However, the court of appeals held that the trial court erred by enlarging the size of space E and also denying Semler's request for attorney fees. Id. at ¶¶ 2, 68, 81. We granted Perfect Place's petition for writ of certiorari.²

¶ 9 Under the plain language of section 38-33.3-213(3), "no subdivision of units shall be effected" without executing and recording the necessary amendments to the condominium declaration, plats, or maps pursuant to section 38-33.3-217(3) and (5), C.R.S. (2018) of CCIOA. Because there is no evidence that Watson caused any documents to be filed or recorded in connection with his purported subdivision, we hold that Watson did not accomplish a valid subdivision of the Garage Unit.

¶ 10 We further hold that the court of appeals erred in concluding that the 2011 Quitclaim Deed was void for fraud in the factum. Although evidence in the record suggests that Watson may have been deceived as to the purpose of the 2011 Quitclaim Deed, fraud in the factum requires more—namely, proof that the grantor was ignorant as to the nature of the instrument itself. Here, the evidence reflects that Watson understood he was signing a quitclaim deed, even if he did not appreciate the ramifications of his act. Thus, the deed is voidable, but not void.

¶ 11 In light of our holdings that Watson did not accomplish a valid subdivision of the Garage Unit and that the 2011 Quitclaim Deed was improperly declared void for fraud in the factum, remand is necessary to determine the resulting chain of title for the disputed parking spaces. We decline to consider the remaining issues on which we granted certiorari review, as these issues cannot be decided in this case without first resolving the chain of title for these spaces.

¶ 12 Accordingly, we reverse the judgment of the court of appeals and remand for further proceedings consistent with this opinion.

I. Facts and Procedural History

¶ 13 In June 1993, 1940 Blake Street Corporation dedicated the Building to condominium ownership by recording a written declaration (the "Declaration"). The Declaration established twelve condominium units. Ten of these units are apartments and offices; the remaining two are vehicle parking units located in the Building's garage. The Garage Unit is depicted in the list of condominium units and on the map accompanying the declaration as a single 400 square-foot vehicle parking unit containing three parking spaces: C, D, and E. Neither the declaration nor the map identifies the boundaries or dimensions of these parking spaces.

¶ 14 Section 4.7 of the Declaration provides that the Declarant (1940 Blake Street Corporation) or a subsequent owner may divide any condominium unit by filing a supplement to the Declaration and the map.³ If a unit is divided, section 4.7 requires that the percentage interest of ownership in common elements allocated to the original unit shall be divided among the new separate units in proportion to the square footage the new unit bears to the square footage of the original unit. Section 15.2 of the Declaration provides that "[e]ach Owner shall comply strictly with the provisions of this Declaration," and section 15.6 provides that no amendment of the Declaration shall be effective until it is recorded.

¶ 15 In March 2000, 1940 Blake Street Corporation conveyed nearly all of the condominium units in the Building, including the Garage Unit, to Quail Street by warranty deed. At all relevant times, Quail Street's manager and sole shareholder was John Watson. At some point after the Garage Unit was conveyed to Quail Street, Watson painted or marked with tape the boundaries for parking spaces C, D, and E.⁴ Spaces C and D were marked as normal-sized parking spaces; Space E was marked as a smaller space, such as for a motorcycle. There is no evidence in the record that Watson ever filed or recorded any documents in connection with his physical marking of the boundaries of the parking spaces.

¶ 16 In February 2002, Watson caused Quail Street to execute a quitclaim deed that purportedly conveyed "Unit G—C/D" to himself. Watson then transferred his interests in spaces C and D to different buyers; in some of these transactions, it was unclear whether Watson was acting in his individual capacity or on behalf of Quail Street. Those who initially purchased from Watson later transferred their interests to others. Over the years, the City and County of Denver taxed each space (C, D, and E) individually, the Building's condominium association assessed dues for each space individually, and title...