Phx. E. Ass'n, Inc. v. Perdido Dunes Tower, LLC

• Decision Date: 14 June 2019
• Docket Number: 1170694
• Citation: 295 So.3d 1016
• Parties: PHOENIX EAST ASSOCIATION, INC., Phoenix VIII Association, Inc., and Karen Draper v. PERDIDO DUNES TOWER, LLC, et al.
• Court: Alabama Supreme Court

295 So.3d 1016

PHOENIX EAST ASSOCIATION, INC., Phoenix VIII Association, Inc., and Karen Draper

v.PERDIDO DUNES TOWER, LLC, et al.

1170694

Supreme Court of Alabama.

June 14, 2019

Rehearing Denied October 11, 2019

Daniel G. Blackburn and Grant Blackburn of Blackburn & Conner, P.C., Bay Minette, for appellants.

Jeffrey R. Sport, Mobile, for appellees Perdido Dunes Tower, LLC, and Perdido Dunes Tower Condominium Owners Association, Inc.; and Bert P. Noojin and Corinne V.J. Kearbey of Noojin & Noojin, P.C., Fairhope, for appellee Perdido Dunes Condominium Owners Association, Inc., a Master Association.

Andrew J. Rutens and Melissa P. Hunter of Galloway, Wettermark & Rutens, LLP, Mobile, for appellee City of Orange Beach.

STEWART, Justice.

This case involves a dispute over the planned construction of a high-rise condominium along the Gulf of Mexico in Orange Beach. For the reasons stated below, we dismiss the appeal in part and affirm the judgment of the Baldwin Circuit Court.

Facts and Procedural History

In 1984, Perdido Dunes, a Condominium ("Perdido Dunes"), a beachfront condominium in Orange Beach ("the City"), was created upon the filing of a declaration of condominium in the Baldwin Probate Court ("the probate court"). The declaration established Perdido Dunes Association, Inc. ("PDAI"), as the condominium association for Perdido Dunes. The property on which Perdido Dunes was situated ("the Perdido Dunes property") is a rectangular plat bordered by Alabama State Route 182 to the north and by beachfront along the Gulf of Mexico to the south. As originally constructed, Perdido Dunes consisted of two buildings. The first building contained 8 condominium units ("the 8-unit building") and was located on the southern-most edge of the Perdido Dunes property facing the beach. The second building, containing 35 units ("the 35-unit building"), was constructed along the western property line of the Perdido Dunes property. The eastern side of the Perdido Dunes property contained a parking lot.

The Perdido Dunes property shares common boundaries with property containing other beachfront condominium buildings. Phoenix East, a Condominium, which was created by the filing of a declaration of condominium in the probate court in 1995, is a 14-story condominium with 158 residential units located adjacent to and directly east of the Perdido Dunes property. Pursuant to the 1995 declaration, Phoenix East Association, Inc. ("Phoenix East Association"), is the condominium association organized pursuant to the Alabama Uniform Condominium Act, § 35-8A-101 et seq., Ala. Code 1975 ("the Act"), for the purpose of managing Phoenix East.¹ Phoenix VIII, a Condominium, is a 15-story condominium with approximately 81 units that was constructed in 2000 and established by the filing of a declaration of condominium in 2000. Phoenix VIII is located adjacent to and directly west of the Perdido Dunes property. Pursuant to the 2000 declaration, Phoenix VIII Association, Inc. ("Phoenix VIII Association"), is the condominium association organized pursuant to the Act for the purpose of managing Phoenix VIII. The Perdido Dunes property is separated from the Phoenix East and the Phoenix VIII properties by retaining walls owned by the latter condominiums that run along the boundary lines of the respective properties.

On September 16, 2004, Hurricane Ivan made landfall over Baldwin County, causing significant structural damage to Perdido Dunes. Although repairs were made to the 35-unit building, the 8-unit building was destroyed by the storm, and the remnants of the 8-unit building were subsequently demolished. So that the unit owners of the 35-unit building would not be required to contribute to the cost of rebuilding the 8-unit building, the members of the PDAI negotiated a plan for the Perdido Dunes property. The City's zoning regulations prohibited Perdido Dunes from separating the Perdido Dunes property into two parcels, but the City would allow Perdido Dunes to split the PDAI into two neighborhood associations governed by a master association. Each neighborhood association would own the land beneath its respective building. On October 29, 2005, a majority of the unit owners of the PDAI voted to terminate Perdido Dunes and the PDAI. Simultaneously, the unit owners voted to approve an agreement that would reform the PDAI under a master association named the Perdido Dunes Condominium Owners Association, a Master Association, Inc. ("the Master Association"). The ownership interest in the Master Association would comprise the unit owners of two newly created neighborhood associations, namely the Perdido Dunes Tower Condominium Owners Association, Inc. ("the PD Tower Association"), and the Perdido Dunes 2006 Condominium Owners Association, Inc. ("the PD 2006 Association"). The PD Tower Association would serve as the association for Perdido Dunes Tower, a Condominium ("Perdido Dunes Tower"), a prospective 10-story, 20-unit condominium building measuring 56 feet in length that was to be developed by Perdido Dunes Tower, LLC ("Tower LLC"), on the land where the 8-unit building had been located. Likewise, the PD 2006 Association would serve as the association for Perdido Dunes 2006, a Condominium ("Perdido Dunes 2006"), which consisted of the 35-unit building. Under the agreement approved by a majority of the Perdido Dunes unit owners, the common-area property for the two buildings would be owned and managed by the Master Association. The board of directors of the Master Association would consist of six members, three of whom would be selected by the unit owners who were members of the PD Tower Association and three of whom would be selected by the unit owners who were members of the PD 2006 Association.

Because the arrangement contemplated by the agreement was not a conventional situation contemplated by the Act, the PDAI sought ratification of the agreement by the Baldwin Circuit Court ("the trial court"). The PDAI filed a complaint for declaratory relief in the trial court, which was docketed as case no. CV-05-741 ("the termination action"). The complaint named as defendants all Perdido Dunes unit owners. On January 5, 2006, the trial court entered an order finding that Perdido Dunes had been validly terminated pursuant to the terms of the 1984 declaration. The trial court also approved of the formation of the Master Association, the PD Tower Association, and the PD 2006 Association. The trial court further stated that "the officers of [the PDAI] and the managing members of [Tower LLC] are hereby appointed as Trustees for the holders of their respective interests and are further empowered to affect all actions necessary to establish a new master association and two (2) neighborhood condominium associations." On January 6, 2006, declarations of condominium creating the Master Association, Perdido Dunes Tower, and Perdido Dunes 2006 were filed in the probate court. The articles of incorporation forming the new condominium associations also were filed in the probate court. The new condominiums and associations were created and organized pursuant to the Act. The trial court entered a final judgment in the termination action on January 6, 2006 ("the 2006 judgment"), acknowledging that the appropriate documents had been filed in the probate court to establish the new condominiums and the new associations. The trial court incorporated the January 5, 2006, order into the 2006 judgment by reference. Neither Phoenix East Association nor Phoenix VIII Association intervened in the termination action. No appeal was taken from the 2006 judgment.

On August 1, 2008, the City issued a building permit to Tower LLC authorizing it to begin construction of Perdido Dunes Tower. Construction, however, was delayed as a result of litigation between the PD Tower Association and the PD 2006 Association. That litigation was resolved in October 2014. Tower LLC established plans to begin construction of the building on April 13, 2015.

The planned construction was interrupted on April 6, 2015, when the City notified Tower LLC of concerns relating to the width of the proposed Perdido Dunes Tower in relation to the neighboring properties, namely Phoenix East and Phoenix VIII. Specifically, the City questioned whether the location of Perdido Dunes Tower would comply with the City's zoning regulation requiring a 20-foot side setback in relation to neighboring property on either side of a condominium building. In order for the 56-foot-wide Perdido Dunes Tower to comply with the 20-foot setback requirement in relation to Phoenix East and Phoenix VIII, the southern property line of the Perdido Dunes property would need to measure at least 96 feet in length. The City directed that Tower LLC could not begin substantial construction on the building, and the City informed Tower LLC that its building permit would be revoked. If the building permit were revoked, Tower LLC would be required to apply for a new permit under updated City building standards, which, according to the trial court's judgment being challenged on appeal, "would have required significant additional undertakings by the Tower LLC to attempt to complete the building of a compliant tower structure."

On April 13, 2015, the PD Tower Association and Tower LLC filed a complaint in the trial court against the City, seeking a judgment declaring that Tower LLC could move forward with the construction of Perdido Dunes Tower and seeking to enjoin the City from revoking Tower LLC's building permit. The case was docketed as case no. CV-15-900449 ("the declaratory-judgment action"). In the complaint, the PD Tower Association and Tower LLC alleged that, since 1984, they or their predecessors had been in peaceable possession of all property east of the retaining wall separating the Perdido Dunes property from Phoenix VIII and west of the retaining wall separating the Perdido Dunes property from Phoenix East. This, they alleged, included two narrow...