Riverview Condo. Ass'n v. Cypress Ventures, Inc.

• Jurisdiction: Oregon
• Parties: RIVERVIEW CONDOMINIUM ASSOCIATION, an Oregon non-profit corporation, Plaintiff–Appellant Cross–Respondent, v. CYPRESS VENTURES, INC., an Oregon domestic business corporation; Defendant, and Bank One Arizona, NA, a national banking association; Michael S. Morse, an individual; and Daniel S. Bracken, an individual, Defendants–Respondents, and Brookfield Development, Inc., an Oregon domestic business corporation; Defendant–Respondent Cross–Appellant. Brookfield Development, Inc., an Oregon domestic business corporation, Third–Party Plaintiff, v. Peter Zaikin, dba Anytime Construction; Mike Anfilofieff, dba Final Finish Carpentry ; Modern Tech Construction, Inc., an Oregon corporation; Rain–Master Roofing, Inc., an Oregon corporation; and N.W. Cutting Edge Const., Inc., an Oregon corporation, Third–Party Defendants.
• Citation: 339 P.3d 447,266 Or.App. 574
• Docket Number: 100710713,A150586.
• Court: Oregon Court of Appeals
• Decision Date: 29 October 2014

266 Or.App. 574

339 P.3d 447

RIVERVIEW CONDOMINIUM ASSOCIATION, an Oregon non-profit corporation, Plaintiff–AppellantCross–Respondent

v.CYPRESS VENTURES, INC., an Oregon domestic business corporation;

Defendant

and

Bank One Arizona, NA, a national banking association;

Michael S. Morse, an individual;

and Daniel S. Bracken, an individual, Defendants–Respondents

and

Brookfield Development, Inc., an Oregon domestic business corporation;

Defendant–Respondent Cross–Appellant.

Brookfield Development, Inc., an Oregon domestic business corporation, Third–Party Plaintiff

v.Peter Zaikin, dba Anytime Construction;

Mike Anfilofieff, dba Final Finish Carpentry ;

Modern Tech Construction, Inc., an Oregon corporation;

Rain–Master Roofing, Inc., an Oregon corporation;

and N.W. Cutting Edge Const., Inc., an Oregon corporation, Third–Party Defendants.

100710713

A150586.

Court of Appeals of Oregon.

Argued and Submitted March 6, 2014.

Decided Oct. 29, 2014.

Ryan D. Harris argued the cause for appellant-cross-respondent.With him on the briefs were Vial Fotheringham LLP and Thomas M. Johnson.

Peter Hawkes, Portland, argued the cause for respondentsBank One Arizona, NA, and Daniel S. Bracken.With him on the brief was Lane Powell PC.

Lori DeDobbelaere, Portland, argued the cause for respondentMichael S. Morse.With her on the brief was Lachenmeier Enloe Rall & Heinson.

Bruce R. Gilbert, Portland, argued the cause for respondent-cross-appellant.With him on the briefs was Stephan E. Archer and Smith Freed & Eberhard P.C.

Before DUNCAN, Presiding Judge, and WOLLHEIM, Judge, and LAGESEN, Judge.

Opinion

DUNCAN, P.J.

Plaintiff, a condominium association, appeals after the trial court dismissed, based on the statute of repose and statute of limitations, plaintiff's claims against defendants.In those claims, plaintiff alleged that defendants were negligent during construction of the condominium buildings, concealed known defects in the buildings, and mismanaged the condominium association and its finances before they turned it over to the unit owners.For the reasons that follow—many of which derive from cases that were decided after the trial court ruled—we conclude that the court erred in granting summary judgment on plaintiff's construction-defect and nuisance claims, which allege injuries to plaintiff's interest in real property and are governed by a six-year statute of limitations, but we affirm the court's dismissal of claims alleging financial harm, which are governed by a two-year statute of limitations.Accordingly, we reverse in part and remand for further proceedings.

I.BACKGROUND

A.Facts

Because this case comes to us after the grant of defendants' motions for summary judgment, we state the relevant facts in the light most favorable to plaintiff, the nonmoving party.Loosli v. City of Salem,345 Or. 303, 306 n. 1, 193 P.3d 623(2008).¹

Cypress Ventures, Inc.(Cypress Ventures) was owned by Lowell Morse; his son, defendantMichael Morse, was its president.Lowell Morse also owned a 1/3 interest in Brookfield Development, Inc.(Brookfield), which is also a defendant in this case.Cypress Ventures hired Brookfield to act as the general contractor for a condominium development, a three-building, 17–unit condominium known as the Riverview Condominium.Cypress Ventures also hired Brookfield to develop townhomes next to the condominium development.

In 1999, Brookfield started construction on the Riverview Condominium.Construction continued through the first part of 2000, and all three of the buildings received final permits and certificates of occupancy by May 10, 2000.Brookfield received its final payment from Cypress Ventures that same month.

Shortly thereafter, on July 27, 2000, Cypress Ventures recorded with Multnomah County the declaration, association bylaws, and plat that submitted Riverview Condominium to the condominium form of ownership, as governed by the Oregon Condominium Act, ORS chapter 100.The recording also established the Association of Unit Owners of Riverview Condominium(the Association), which is the plaintiff in this action.The Association is composed of all unit owners.

Under the Association's bylaws, Cypress Ventures—the “declarant” of the condominium—had the power to appoint and replace the Association's directors and officers until three years after the first unit was sold or 75 percent of the units (i.e., 13 of the 17 units) had been sold, whichever came first.Cypress Ventures installed Lowell Morse, along with Steve Eck, Brookfield's president, as two of the Association's three interim directors.

Cypress Ventures then began to sell individual units.The first unit sold on August 10, 2000.However, Cypress Ventures encountered financial difficulties and sold only one more unit before deeding its interest in the Riverview Condominium, in lieu of foreclosure, to its creditor, defendant Bank One, on December 29, 2000.In conjunction with that property transfer, Lowell Morse and the Association's other interim board members resigned, and Bank One, now the successor “declarant” of the condominium, installed its own board members, including defendantDaniel Bracken, a vice president for Bank One, to direct the Association.

A year later, in December 2001, Bank One sold the 13th unit of the condominium, which triggered the “turnover” process under the bylaws whereby Bank One was to cede its control over the Association's board.On February 21, 2002, the Association held the turnover meeting, and the unit owners elected their own board members to direct the Association.

At some point after the turnover, unit owners began experiencing water intrusion into their units.At a condo association meeting in early 2003, unit owners and board members discussed “problems with leaking windows” in the units.The first documented repair occurred in the fall of 2003, in unit 4C.The Association hired Himango Siding to repair the leaking windows in that unit.The invoice for the repair work, which was submitted to the board in November 2003, included the following notation:

“Supplied labor and material to remove necessary existing siding on front wall of unit 4–C, determine cause of leaks in unit 4–C windows, repair leaks and reinstall new and existing siding as necessary.

“ * * * * *

“FYI: the reason these windows leaked is as follows: the original siders ran there [sic ] building paper over the top of the window opening weather strip instead of under it so water that gets in at the bottom of upper windows can get behind the paper [and] run down the wall and into the top of the bottom windows.We used a sticky rubber membrane to create a positive seal from the window flange to the paper so if water does get past the caulking over time it must stay on the outside of the building paper.”²

After that repair was made, the board continued to receive reports of water leaks.Sometime between 2004 and 2006, another owner, Sara Berreth, developed a leak in the bedroom windows of her unit.Berreth had been elected as a board member at the turnover meeting and served as the Association's treasurer.The Association hired Darren Williams to repair her leaking windows.Williams repaired the leaks but told Berreth that his repair work would not provide a permanent fix “because of the way it was constructed.”³

Another unit owner, Shawn Smith, who later served on the Association's board from 2005 to 2008, discovered in 2004 that his windows in his master bedroom were leaking.He noticed that water was leaking from around the top of the windows and that the caulking was sagging.Smith's windows were repaired in September 2004, and he spoke with the contractor who performed those repairs.The contractor told Smith that “there's two different styles of siding from the bottom unit to the top unit, that the interface between those two was done incorrectly, and that around the windows themselves something to do with flashing, the way it was installed was funneling water into—over the windows, and then it was coming down in the walls and pooling.”Smith relayed that information to the Association's board.

In a letter dated July 27, 2004, a property manager, Gordon Properties, LLC, notified the board that “three out of the five of the condos that we manage have leaking windows.The windows have leaked for as long as we have managed them, which is all the way back to when the first tenants moved in.”Then, in October 2004, the Association received a report that unit 4C was continuing to experience water leaking from windows, and that the fire alarm in unit 4C had been set off by “water coming through the alarm unit from 4D.”The fire department had forced its way into unit 4D and “concluded the water [was] coming from the upper unit 4D walls.”The report, which was made by the owner of unit 4C, requested “help in getting this water damage resolved by sending out a building inspector and contractor to take care of this problem.”

Gordon Properties, which managed unit 4D, recommended that the Association hire Sherman Rake Company to address leaks in various windows, and the Association hired Sherman Rake in 2005.The price of that repair work was $12,120, and Sherman Rake noted in its May 2005 invoice that it found that water had been trapped by the belly band—i.e., where the panel siding transitions to lap siding.Sherman Rake further noted its “[c]oncerns that water could be coming from areas other than around the windows.If such is the case, [Sherman Rake] will not be responsible for on-going water damage that might occur in the future that is caused by anything other than [Sherman Rake's] workmanship.”One of the Association's board members at that time, Angela Long, spoke with Sherman Rake about the repair work and was told that “flashing was put on backwards or something of that nature.”

In February 2006, Long discovered that her own bedroom windows were leaking, and she brought that to the attention of the rest of the board.Also in 2006 or 2007, Smith discovered that...