River Oaks Condo. Ass'n v. Donovan
| Decision Date | 30 August 2013 |
| Docket Number | Case No. 4:12-CV-01880-SPM |
| Parties | RIVER OAKS CONDOMINIUM ASSOCIATION, Plaintiff, v. SHAUN DONOVAN, Secretary, Department of Housing and Urban Development, Defendant and Counterclaimant. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on the defendant's motion for partial summary judgment on its counterclaim for declaratory judgment (Doc. 15), the plaintiff's motion to dismiss the defendant's counterclaims for breach of contract and for declaratory judgment (Doc. 20), and the plaintiff's motion for partial summary judgment on its breach of contract claim (Doc. 24). For the reasons set forth below, the Court will deny the plaintiff's motion for partial summary judgment on its claim, deny the plaintiff's motion to dismiss the defendant's counterclaims, and grant the defendant's motion for partial summary judgment on its declaratory judgment counterclaim.1
This cause of action concerns a dispute over condominium association assessments and fees related to a condominium unit located at 4128 Riverfront Court in Florissant, Missouri (the"Unit"). The Unit is located within the River Oaks Condominium and is part of Plaintiff River Oaks Condominium Association (the "Association"). Under Missouri's Condominium Property Act, Mo. Rev. Stat. §§ 448.005 et seq., and the Declaration of Condominium for River Oaks Condominiums (the "Declaration"), the Association is authorized to impose assessments against unit owners for common expenses and to levy late fees and interest for non-payment of assessments. See Mo. Rev. Stat. §§ 448.3-115, 448.3-102.1(11). In addition, the Association has a lien on a unit for any assessment levied against that unit from the time the assessment becomes due and goes unpaid. Mo. Rev. Stat. § 448.3-116.1.
On May 3, 2006, Tracy N. Snipes, the then owner of the Unit, granted U.S. Bank, N.A., ("U.S. Bank") a purchase money Deed of Trust for the Unit, which was recorded on May 18, 2006. On the same day, Ms. Snipes executed a Second Deed of Trust to St. Louis Department of Planning as Grantee, which was recorded on May 18, 2006. Ms. Snipes later defaulted on the U.S. Bank deed of trust loan, and on January 31, 2011, U.S. Bank completed a foreclosure on the deed of trust loan. This foreclosure terminated Ms. Snipes' ownership and caused U.S. Bank to become the owner of the Unit via a Trustee's Deed Under Sale. On July 1, 2011, U.S. Bank conveyed the Unit to the Department of Housing and Urban Development ("HUD"), which now owns the Unit.
On March 15, 2012, the Association's attorney issued to HUD's agent a "Payoff Memorandum" seeking the following:
Assessments
(February 2011-March 2012 @ $154.00/month)
$ 2,156.00
Six Months of Assessments Prior to Foreclosure
(August 2010-January 2011@ 154.00/month)
$ 924.00
Recording Costs
(January 18, 2011)
$ 27.44
(April 13, 2011)
$ 24.00
(March 2012 - Estimated cost of release)
$ 30.75
Cost to File Petition
$ 82.19
Cost to Obtain Copies of Recorded Documents
$ 7.45
Cost to File Petition
(January 13, 2011)
$ 81.00
Execution Costs
(April 13, 2011)
$ 39.00
Publication Cost
(June 30, 2011)
$ 250.00
Late Fees
(February 2011-March 2012 @ $30.00/month)
$ 420.00
Interest
(@ 18% per annum on Assessments only)
$ 242.55
(includes costs to release the liens)
$ 1,854.50
TOTAL
(Doc. 17-6). On March 20, 2012, HUD issued payment to the Association in the amount of $2,853.32; it is unclear how this amount was calculated. In an email on April 9, a representative of HUD stated that it had paid the assessment fees from foreclosure going forward, which was what it was legally obligated to pay. In an email the same day, counsel for the Association sent HUD an email stating the following:
(Doc. 17-8). On April 10, an agent of HUD responded that subsection 2(2) of Section 448.3-116 established that the mortgage had priority over the assessment lien, that the Missouri statute did not create a super-priority lien over the foreclosed mortgage, that the lien was removed in the foreclosure process, and that release of the lien was not necessary. On the same day, counsel for the Association responded that even under HUD's interpretation of the statute, HUD's paymenthad not covered the full amount owed, and that it would begin foreclosure proceedings if the balance owed was not paid. Between April 10 and April 27, 2012, the attorney for the Association received telephone calls from various representatives of HUD and from others insisting that the payment amount was correct. On May 4, 2012, the Association returned HUD's offered payment because there was no meeting of the minds.
On May 24, 2012, the Association received a letter from HUD explaining its position on Section 448.3-116.2 of Missouri's Condominium Property Act. On July 17, 2012, the Association and a representative of HUD discussed their difference of opinion as to the language of the statute and agreed to begin settlement negotiations. On July 17, 2012, the Association sent HUD an amended Payoff Memorandum that included a request for three months of pre-foreclosure assessments. On August 14, 2012, a representative of HUD mailed a letter to the Association explaining HUD's position on Section 448.3-116.2, without payment or any offer of settlement.
On August 30, 2012, the Association filed a Petition in the Circuit Court of St. Louis County against HUD for "Breach of Contract for Delinquent Condominium Assessments," and HUD removed the case to this court due to the presence of a United States government defendant. In its Petition, the Association alleges that under the Declaration, HUD owes and has refused to pay $5,820.54, itemized as follows:
Assessments
(July 2011-August 2012 @ $154.00/month)
$ 2,156.00
Remaining Assessments
(September-December 2012 @ $154/month)
$ 616.00
Recording Cost
$ 82.19
Cost to Obtain Copies of Recorded Documents
$ 23.85
Cost to File Petition
$ 162.00
Execution Costs
$ 39.00
Publication Cost
$ 250.00
Late Fees
$ 420.00
Credits
$ (154.00)
Interest (@ 18% per annum)
$ 231.00
$ 1,994.50
TOTAL
(Doc. 2, ¶ 6). The Association also seeks assessments and charges through the date of judgment, as well as reasonable attorney's fees. The Association does not seek pre-foreclosure assessments in its Petition; however, it specifically asserts that it does not waive its statutory lien rights under Section 448.3-116 of the Missouri Uniform Condominium Act to collect unpaid assessments, late fees, interest, or other charges enforceable as assessments due prior to July 2011.
On March 11, 2013, HUD filed a Second Amended Counterclaim Complaint, asserting counterclaims against the Association for breach of contract and for declaratory judgment. In its breach of contract claim, HUD alleges that the Association breached an implied term of the contract between the parties by refusing to accept HUD's March 20, 2012 proffer to pay assessments and fees. HUD asserts that as a result of this breach of contract, HUD has been unable to sell the Unit and has incurred legal fees and costs for maintaining the Unit. In its Declaratory Judgment claim, HUD seeks a declaration that, as a matter of law, there exist no priority liens for any unpaid assessments that became delinquent before the January 31, 2011 foreclosure; that the Association has no legal right to demand payment from HUD to satisfy or release any claimed priority liens that attached to the Unit before January 31, 2011; and that the Association has no legal right to demand payment from HUD of any late fees, fines, penalties, or attorney's fees or collection fees attributable to attempts to satisfy liens that attached before January 31, 2011.
The Association has moved to dismiss both of HUD's counterclaims and has moved for partial summary judgment on its own breach of contract claim. HUD has moved for partial summary judgment on its declaratory judgment counterclaim.
The Association has moved to dismiss HUD's breach of contract counterclaim and its declaratory judgment counterclaim for failure to state a claim.
When considering a motion to dismiss for failure to state a claim under Rule 12(b)(6), the Court "must accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party." Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005) (citing Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001)). To survive a motion to dismiss, a complaint must contain "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need to contain detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555; Huang v. Gateway Hotel Holdings, 520 F. Supp. 2d 1137, 1140 (E.D. Mo. 2007).
The elements of a breach of contract action under Missouri law are "(1) the existence and terms...
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