Roats v. Blakely Island Maint. Comm'n, Inc.

• Decision Date: 02 July 2012
• Docket Number: No. 66514–6–I.,66514–6–I.
• Citation: 169 Wash.App. 263,279 P.3d 943
• Parties: Gary C. ROATS, Trustee for the real property Lot 128; Gary C. Roats and Pamela A. Roats, husband and wife, owners of the real property: Lot 129, San Juan Aviation Estates, on their own behalf and on behalf of a class of similarly situated individuals, Appellants/Cross–Respondents, v. BLAKELY ISLAND MAINTENANCE COMMISSION, INC., a Washington non-profit corporation; Ellen Roth, Anne Malmo, Jim Fergus, Dick Demers, Scott Burkhart, Deborah Davey and Gail Light, in their capacity as Governors of the Board of the Blakely Island Maintenance Commission, Inc. and in their individual capacities, Respondents/Cross–Appellants.
• Court: Washington Court of Appeals

169 Wash.App. 263

279 P.3d 943

Gary C. ROATS, Trustee for the real property Lot 128; Gary C. Roats and Pamela A. Roats, husband and wife, owners of the real property: Lot 129, San Juan Aviation Estates, on their own behalf and on behalf of a class of similarly situated individuals, Appellants/Cross–Respondents,

v.BLAKELY ISLAND MAINTENANCE COMMISSION, INC., a Washington non-profit corporation; Ellen Roth, Anne Malmo, Jim Fergus, Dick Demers, Scott Burkhart, Deborah Davey and Gail Light, in their capacity as Governors of the Board of the Blakely Island Maintenance Commission, Inc. and in their individual capacities, Respondents/Cross–Appellants.

No. 66514–6–I.

Court of Appeals of Washington, Division 1.

July 2, 2012.

Arthur Washington Harrigan, Jr., Christopher Thomas Wion, Elizabeth Weden Perka, Danielson Harrigan Leyh & Tollefson LLP, Seattle, WA, for Appellant.

Lawrence A Costich, Averil Budge Rothrock, Milt Reimers, Schwabe Williamson & Wyatt PC, Seattle, WA, for Respondent.

DWYER, J.

[169 Wash.App. 266]¶ 1 Gary and Pamela Roats (the Roatses) appeal from a summary judgment order dismissing their claim against the Blakely Island Maintenance Commission, Inc. (the Association), a homeowner's association of which the Roatses, as property owners within the San Juan Aviation Estates (the Estates) on Blakely Island, are members. The Roatses challenge the trial court's determination that the Association has the authority, pursuant to its governing documents, to create a limited liability company and, through that company, to enter into a lease to operate a marina, fuel dispensers, and a general store on the island.

¶ 2 The Roatses additionally challenge the trial court's denial of an award of attorney fees based upon a separate claim on which they prevailed in part. On cross appeal, the Association challenges the trial court's award of attorney fees to the Association, asserting that the trial court improperly limited the fee award. Finding no error in the trial court's orders, we affirm.

I

¶ 3 The Roatses own two lots within the San Juan Aviation Estates, a residential subdivision located on Blakely Island. The Association, which governs the Estates, was incorporated in 1961 for the purpose of providing services “for the occupants and owners of San Juan Aviation and Yachting Estates.” In addition to the Articles of Incorporation (the Articles) that created the Association as a nonprofit corporation in the State of Washington, the Association has throughout the years adopted various governing documents. These documents include the By–Laws of the Blakely Island Commission, Inc. (the By–Laws) adopted in 1971 and the Blakely Island Covenants (the Covenants) adopted in 1995.¹

¶ 4 The Association governs more than merely the residential subdivision. It also owns and maintains property separate from the residential lots owned by its members, including an airport landing strip, tennis courts, all nonprivate roads designated on the plat, a fire station, a water treatment system, the right to draw water from nearby Horseshoe Lake, two parks, a recycling center, and a beach access lot. Since May 2006, the Association—through the Blakely Community Facility, Inc. (the BCF), a limited liability company wholly owned by the Association—has also leased and operated the privately owned Blakely Island Marina. The marina consists of a dock, fuel dispensers for cars and boats, and a general store. These are the only amenities of their kind on Blakely Island.

¶ 5 The Association first contemplated leasing and operating the marina in early 2005, when the marina's owner, Blakely Island Marina, LLC, announced that it would cease operating certain marina facilities and offered to lease those facilities to the Association. The Association thereafter sought to gauge its members' interest in operating those portions of the marina; to that effect, it created a special committee and surveyed its membership. In November 2005, the Association held a special meeting to determine whether to lease the marina facilities and create a subsidiary to oversee related operations. At that meeting, a majority of the membership approved a motion to authorize the Board of the Association “to undertake and conclude negotiations to lease certain portions of the [marina].”

¶ 6 The Association thereafter created the BCF, and the BCF entered into a lease with the owner of the marina. Pursuant to the lease, the BCF, as lessee, is entitled to operate the marina facilities, “in support of the Blakely community,” including the marina's “vehicle and boat fueling systems, barge ramp, water taxi landing dock, boat ramp, marina store, public restrooms, parking lot and BBQ shed.” The lessor, Blakely Island Marina, LLC, retains control of the moorage floats and entitlement to the rents and profits received by leasing out moorage slips at the marina. In addition to entering into the lease, the Association authorized various expenditures related to the BCF and operation of the marina facilities.²

[169 Wash.App. 269]¶ 7 In early 2009, the Association mailed an annual assessment to its members. The assessment included the 2008 BCF- and marina-related expenses, estimated to be $1,123.70 per lot. The Roatses refused to pay the portion of their assessment related to marina expenses. The Association thereafter threatened to file a lien against the Roatses' property based upon the unpaid assessment.

¶ 8 In May 2009, the Roatses filed a first amended complaint, asserting five causes of action against the Association and its Board: (1) a declaratory relief claim regarding the validity of the Covenants, (2) a declaratory judgment action asserting that the Association did not have the authority to lease and operate the marina and levy related expenses, (3) an action to quiet title based upon the Association's notice threatening to assert a lien against their properties, (4) a breach of duty of care claim against the Association's Board members, and (5) a claim asserting open meetings violations pursuant to RCW 64.38.035.³

¶ 9 The Roatses asserted in their complaint that “[o]n June 30, 2006, Blakely Community Facility, LLC entered into a Lease Agreement with Blakely Island Marina, LLC, leasing the marina, store and fuel operations.” In their request for declaratory relief, they “maintain[ed] that the Bylaws for the [Association] do not permit the Board to create a separate entity to enter into a lease with Blakely Island Marina, LLC to operate a retail operation, including the refueling operations.” They further “maintain[ed] that the Board was and is without authority to assess fees to fund the operation for the marina, store and fuel operations and the maintenance [thereof].” Thus, the Roatses asserted that they “are entitled to a declaration that [the Association] has no such authority.”

[169 Wash.App. 270]¶ 10 The Roatses thereafter sought a temporary restraining order to enjoin the Association from filing liens against their property for nonpayment of the assessment. On May 14, 2009, the Roatses' motion for a temporary restraining order was vacated by stipulation of the parties and the Roatses deposited the estimated amount of their overdue assessment into the superior court registry. The stipulation stated that the Roatses would thereby be “ considered current on their Annual Assessments.”

¶ 11 All but one of the Roatses' claims against the Association and its Board were thereafter dismissed. First, the trial court entered an order granting the parties' stipulation to dismiss the Roatses' quiet title claim, which was premised upon the Association's threat to file a lien against the Roatses' properties. Then, the Association moved for partial summary judgment dismissal of the Roatses' claim for declaratory judgment regarding the validity of the Covenants. The trial court granted the Association's motion.⁴ The Roatses thereafter moved to voluntarily dismiss their claim for breach of duty of care. The trial court granted the motion, thus dismissing that claim.

¶ 12 On May 7, 2010, the Association filed a motion for summary judgment, seeking dismissal of the Roatses' two remaining claims—that the Association did not have the authority to lease and operate the marina facilities and to levy related assessments and that the Board members had violated open meetings requirements set forth in chapter 64.38 RCW. The Roatses filed a motion for partial summary judgment on their claim regarding the scope of the Association's authority. Specifically, they sought a declaratory judgment that the Association “lacks authority to operate a marina, conduct fueling operations, and manage a general store; to assess property owners for expenditures and/or operating losses arising from such operations; and to file, or threaten to file, liens on the [Roatses'] properties for non-payment of those assessments.” In their motion, the Roatses contended that the Association lacks the authority to engage in such activities because, they asserted, its governing documents do not confer upon it such authority.

¶ 13 The trial court held a hearing on the motions.

¶ 14 On July 15, 2010, the court entered an “Order on the Parties' Cross–Motions for Summary Judgment Relating to the Roatses' Second and Fifth Claims.” The trial court granted the Association's motion for summary judgment dismissal of the Roatses' claim regarding the Association's scope of authority to operate marina facilities. However, the court denied the Association's request for dismissal of the Roatses' claim regarding open meetings violations. Instead, the trial court granted the Roatses' motion for partial summary judgment on that claim, which alleged a violation of RCW 64.38.035, “to the extent that the Court declare[d] that the Association failed to give proper notice to its membership for an undetermined number” of Board meetings. The trial court further declared that, contrary to the Roatses' assertion, “telephonic meetings by...