Rotonda Condominium Unit Owners Ass'n v. Rotonda Associates

• Decision Date: 09 June 1989
• Docket Number: No. 870711,870711
• Citation: 238 Va. 85,380 S.E.2d 876
• Parties: The ROTONDA CONDOMINIUM UNIT OWNERS ASSOCIATION v. The ROTONDA ASSOCIATES, et al. Record
• Court: Virginia Supreme Court

Page 876

380 S.E.2d 876

238 Va. 85

The ROTONDA CONDOMINIUM UNIT OWNERS ASSOCIATION v. The ROTONDA ASSOCIATES, et al.

Record No. 870711.

Supreme Court of Virginia.

June 9, 1989.

Stephen H. Moriarty (Hyatt & Rhoads, P.C., Washington, D.C., on briefs), for appellant.

John E. Coffey (David G. Fiske, Ronald L. Lord, Hazel, Thomas, Fiske, Beckhorn & Hanes, P.C., Alexandria, on brief), for appellees.

Present: CARRICO, C.J., COMPTON, STEPHENSON, RUSSELL, THOMAS, and WHITING, JJ., and POFF, Senior Justice.

RUSSELL, Justice.

The dispositive question in this case is whether a condominium unit owners' association had standing to bring an action on behalf of the individual unit owners, based on alleged defects in construction of the common elements, where the cause of action arose before July 1, 1981. We conclude that the association lacked such standing.

The Rotonda Condominium Unit Owners Association (the Association) filed a motion for judgment on July 23, 1985, against The Rotonda Associates, Rotonda Development Corporation, and Rotonda Realty, Incorporated (collectively, the Developer). The Association alleged that the Developer was responsible for structural defects in the common elements of The Rotonda Condominium, a development in the Tyson's Corner area of Fairfax County consisting of five ten-story buildings. The motion for judgment contained counts alleging breach of statutory warranties, negligent construction, and negligent repairs.

The essential facts are undisputed. Construction began in mid-1976 and was completed in mid-1980. The first building was completed in January 1978 and the first unit was conveyed that same month. In early 1979, the first in a long series of structural defects was discovered by the owners and brought to the Developer's attention.

The fifth and last building was not completed until June 1980, and the first unit in that building was conveyed in August of that year. Because defects were coming to light during the period of construction, and because the Developer retained control of the Association until the statutorily prerequisite number of units was sold, the unit owners, in 1979, became concerned that their rights to enforce statutory warranties might expire before they could obtain control of the Association and investigate potential claims against the Developer.

When representatives of the owners brought these concerns to the Developer's attention, Giuseppe Cecchi, president of the Developer companies, responded with a series of letters in which he explicitly promised, on the Developer's behalf, (1) that the Developer would not plead the three-year statute of limitations in any suit to enforce the statutory warranty instituted by the Association within "five years of the date of accrual of the cause of action," (2) that repairs would be made of any defects for which the Developer was responsible regardless of the expiration of the statutory warranties, and (3) that the Developer would correct any mistake for which it was responsible regardless of the time such defect was discovered or reported.

The promise not to plead the statute of limitations within five years was further recorded in a written "warranty agreement" executed by both the Developer and the Association in January 1980. The unit owners took control of the Association in June 1980. The Association called many defects to the Developer's attention after that time, and the Developer made many repairs from 1979 extending into early 1985.

As noted above, the Association brought this action in July 1985 against the Developer. No individual unit owners were made parties. The Developer filed pleas in bar, raising the defense of the statute of limitations to the counts alleging negligent construction and breach of warranty, and moved to dismiss the count alleging negligent repair on the ground that it failed to state a cause of action. The Developer also moved for summary judgment on the ground that the Association lacked standing to assert claims which belonged entirely to the individual unit owners. The Association, relying on the Cecchi letters and the "warranty agreement," argued that the Developer had expressly waived the right to plead the statute of limitations and was estopped by its conduct from reliance on that defense. The court sustained the Developer's pleas in bar and motion to dismiss, but denied the motion for summary judgment which raised the question of standing. We granted the Association an appeal, and the Developer assigned cross-error to the trial court's ruling that the Association had standing to sue.

Because we regard the question of standing as dispositive, we do not reach the Association's principal assignments of error. We held in Chesapeake House v. Va. National Bank, 231 Va. 440, 442, 344 S.E.2d 913, 915 (1986), that condominium unit owners' associations had no authority to bring representative or derivative actions to vindicate the rights of individual condominium unit owners until the Condominium Act was amended by the adoption of Code § 55-79.80(b1), effective July 1, 1981. That subsection provides, in pertinent part that

the executive organ of the unit owners' association, if any, and if not, then the unit owners' association itself, shall have the irrevocable power as attorney-in-fact on behalf of all the unit owners ... to assert, through litigation or otherwise, defend against, compromise, adjust, and settle any claims or actions related to common elements.

Because all five buildings in the Rotonda had been completed, and the first unit in each...