Point's Reach Condo. Council of Unit Owners v. Point Homeowners Ass'n, Inc., 1070

• Decision Date: 30 August 2013
• Docket Number: Sept. Term, 2011.,No. 1070,1070
• Parties: POINT'S REACH CONDOMINIUM COUNCIL OF UNIT OWNERS, et al. v. The POINT HOMEOWNERS ASSOCIATION, INC.
• Court: Court of Special Appeals of Maryland

213 Md.App. 222

73 A.3d 1145

POINT'S REACH CONDOMINIUM COUNCIL OF UNIT OWNERS, et al.

v.The POINT HOMEOWNERS ASSOCIATION, INC.

No. 1070, Sept. Term, 2011.

Court of Special Appeals of Maryland.

Aug. 30, 2013.

K. King Burnett (Roscoe R. Leslie, Webb, Burnett, Cornbrooks, Wilber, Worhis, Douse & Mason, LLP, on the brief), Salisbury, MD, for Appellant.

Richard J. Magid (Whiteford, Taylor & Preston LLP, on the brief), Baltimore, MD, for Appellee.

Panel: EYLER, DEBORAH S., ZARNOCH, and MATRICCIANI, JJ.

EYLER, DEBORAH S., J.

This case concerns the residential real estate development of Section 17 of Ocean Pines, in Worcester County. Section 17 is 139 acres of land more or less, some fronting on the Isle of Wight Bay. A “Planned Unit Development” known as “The Point” was built on Section 17. The Point consists of, at the very least, 124 single-family residences. In addition to these residences, the same developer built three waterfront condominium buildings known as “Point's Reach Condominium.” Whether the unit owners in “Point's Reach Condominium” are required to belong to the Point's Reach Homeowners Association is the central question in this case.

In the Circuit Court for Worcester County, Point's Reach Condominium Council of Unit Owners, William and Elizabeth Iampieri, and Leonard Nemec (collectively “Point's Reach Condominium” or “the Condominium”), the appellants, sued The Point Homeowners Association, Inc. (“The Point HOA” or “the HOA”), the appellee, for declaratory and injunctive relief. They asked the court to find that the Condominium is not part of The Point and is not subject to the Declaration of Restrictions for The Point, as revised and restated in 2000; and that the Condominium unit owners therefore have no obligation to belong to The Point HOA and to pay fees (including annual dues) that the HOA assesses. They sought a permanent injunction prohibiting the HOA from assessing fees against the unit owners and also sought reimbursement of HOA dues previously paid by unit owners and attorneys' fees.

The case was tried to the court for two days, with the second day consisting of the ruling of the court. Counsel for the parties stipulated to numerous relevant documents, which were moved into evidence. The Condominium called three witnesses: Mr. Iampieri, who with his wife owns a unit in the Condominium; Brian Carney, a unit owner and the immediate past Treasurer of the Condominium's Council of Unit Owners; and Mr. Nemec, the trustee of a trust that owns one of the units. The HOA called two witnesses: David Meinhardt who, through his business entity Banker's Development, LLC (“Banker's”), developed Section 17; and John Nesbit, owner of a single-family home in The Point and President of The Point HOA.

In ruling from the bench, the court found that the Declaration of Restrictions for The Point, as revised and restated in 2000, which created the HOA and required membership in it, is not clear as to whether it covers the Condominium units. The court had admitted extrinsic evidence on that issue and, applying the equitable doctrine of implied reciprocal negative covenants, ruled that the Condominium unit owners are subject to that declaration and therefore must belong to the HOA and pay the fees it assesses. The court further found that the HOA is authorized to assess fees. Upon these findings, the court denied all relief sought by the Condominium. It entered a one-page order embodying its ruling.

Unhappy with that outcome, the Condominium noted this appeal, raising four questions for review, which we have combined, reordered, and reworded:

I. Did the trial court err in finding that the Condominium unit owners are bound by the Declaration of Restrictions, as revised and re-stated in 2000, which requires membership in the HOA?

II. Did the trial court err by failing to decide whether the HOA has the power to assess fees?

III. Did the trial court's oral declaratory judgment ruling together with its accompanying written order satisfy the requirement that the court issue a written declaration of the rights of the parties? ¹

We conclude that the 2000 Revised and Restated Declaration of Restrictions (“2000 Declaration”) is clear as to its parties and the lots expressly covered, which do not include the Condominium, but also is clear that all property owners within The Point—which includes the Condominium—must belong to the HOA. Moreover, many of the restrictions in that declaration are, by the declaration's plain language, for the benefit of The Point as a whole, not just the lots expressly covered by the declaration. The inclusion of seemingly inconsistent provisions in this single document creates ambiguities, which leads us to conclude that the trial court properly admitted extrinsic evidence to resolve them. We further conclude that the trial court properly applied the doctrine of implied negative reciprocal covenants, and the evidence relevant to that doctrine strongly rebutted the presumption, arising from the Condominium unit owners not being parties to the 2000 Declaration or the 2000 Declaration not being later revised to include them, that the common grantor did not intend that the unit owners be required to belong to the HOA.

Finally, we conclude that the trial court in fact decided that the HOA has the power to assess fees; that that decision was legally correct; and that the trial court's procedural error in not memorializing its decision in writing, after announcing it in detail on the record, does not preclude our review of the issues, was harmless, and can be corrected on remand without reversing the judgment.

FACTS AND PROCEEDINGS

County Approval of Development of Section 17 of Ocean Pines and Later Purchase of Section 17 by Banker's²

On December 5, 1989, the then-owner of Section 17 of Ocean Pines obtained Step I approval from the Worcester County Commissioners for the “Isle of Wight/Turville Creek Planned Unit Development [“PUD”]” in accordance with the county's master land use plan of September 1, 1987.³ Almost four years later, on August 19, 1993, Step II approval was obtained by a successor owner, which had changed the name of the proposed development to the “Manklin Creek PUD” and had added a portion of Section 15 of Ocean Pines to it. The plan for the Manklin Creek PUD as originally given Step II approval shows single family and multi-family residential structures, the latter to be located near the Isle of Wight Bay waterfront, where the Condominium buildings now stand.

With another transfer in ownership, the name of the development reverted to the “Isle of Wight/Turville Creek PUD” and the area of the PUD was reduced to encompass Section 17 of Ocean Pines only, as it had originally. On June 1, 1995, the Worcester County Commissioners gave Revised Step II approval for the PUD. Thereafter, ownership of Section 17 changed hands several more times. By 1997, Section 17 was owned by the Balfour Real Estate Group, d/b/a BRE/OCEAN PINES, LLC (“Balfour”). Balfour sold a few lots but did not begin construction of infrastructure or residences. Sometime in 1999, Mr. Meinhardt decided to purchase Section 17 from Balfour to develop it, and formed Banker's for that purpose.

1999 Declaration of Restrictions and Related Plats for The Point

On August 30, 1999, Banker's, through Mr. Meinhardt as signatory, finalized a document entitled,

DECLARATION OF RESTRICTIONSTHE POINTSECTION 17—OCEAN PINES

(“1999 Declaration”). Mr. Meinhardt drafted the 1999 Declaration using a form composed by Balfour. The 1999 Declaration was recorded in the Land Records of Worcester County (“Land Records”) on September 3, 1999, together with the deed conveying Section 17 of Ocean Pines from Balfour to Banker's. The 1999 Declaration incorporated by reference a Plat, dated August 1999, and recorded in the Land Records on September 3, 1999 (“the 1999 Plat”).⁴ The 1999 Plat is entitled,

The Villages atOcean PinesSECTION 17—THE POINT—PHASE I & IA

RECORD PLAT

OCEAN PINES, THIRD TAX DISTRICT,

WORCESTER COUNTY, MARYLAND.

The 1999 Plat depicts 90 residential lots to be developed as single family homes, 7 “outlots,” and other planning indications. Note 22 on the 1999 Plat states, “This property is part of and therefore subject to the Isle of Wight/Turville Creek Planned Unit Development....”

The 1999 Plat shows “Phase I” of “The Point” as comprising some of the land south of Ocean Parkway, an east-west thoroughfare that bisects Section 17. A semi-circular area denoted “Parcel A,” and a sliver of land inside Parcel A, next to Ocean Parkway and denoted “Outlot A,” appear in the middle of Section 17, immediately south of Ocean Parkway. Parcel A, which is not part of Phase I, is labeled, “Remaining Lands of Banker's Development LLC Reserved For Future Development.” Note 21 on the 1999 Plat states, “Parcel A is not being approved for building purposes at this time. This area is intended to be developed in the future as a multi-family area.” Pine Forest Drive is depicted as a U-shaped road, beginning and ending on Ocean Parkway, on the boundary of Parcel A. The lots in Phase I are to the south of Pine Forest Drive.

The 1999 Plat also shows “Phase IA” of The Point, which comprises some land in Section 17 north of Ocean Parkway. The land depicted on the 1999 Plat where the Condominium buildings now are located, next to the Isle of Wight Bay, is marked “Remaining Lands of Banker's Development LLC Reserved for Future Development.”

In the 1999 Declaration, a series of introductory “WHEREAS” clauses states among other things that Banker's owns “SECTION 17—THE POINT” as depicted in the 1999 Plat; that “all of the real property described in the Plats comprises Section 17 ... generally known as ‘THE POINT’ (herein called ‘the Section,’ or ‘The Point’)”; that there are subdivided “single-family detached numbered residential lots (herein called ‘the Lots') set forth and described in the Plats” that were filed or are to be filed in the Land Records; and...