Tara Hills Condominium Ass'n v. Gaughan, C2-86-1342
| Decision Date | 27 January 1987 |
| Docket Number | No. C2-86-1342,C2-86-1342 |
| Citation | 399 N.W.2d 638 |
| Parties | TARA HILLS CONDOMINIUM ASSOCIATION, Appellant, v. Patrick J. GAUGHAN, et al., Respondents. |
| Court | Minnesota Court of Appeals |
Syllabus by the Court
1. The trial court did not err in holding that condominium developer provided the required disclosure statement under Minnesota's Uniform Condominium Act.
2. The trial court did not err in holding that the disclosure requirements were satisfied where the disclosure statement simply referred to the statutory warranties instead of expressly listing them.
3. The trial court did not err in holding that the retaining walls on the condominium grounds were not amenities, but were part of the common elements which were adequately disclosed.
4. The trial court did not err in denying summary judgment where questions of fact existed as to alleged title defects and alleged violations of land use regulations.
5. The trial court did not err in refusing to consider an issue that the parties had settled during a pretrial conference.
Kurt M. Anderson, Thomas P. Balyk & Associates, St. Paul, for appellant.
John R. Dorgan, Frommelt & Eide, Ltd., Minneapolis, for respondents.
Heard, considered, and decided by POPOVICH, P.J., and WOZNIAK and FORSBERG, JJ.
Tara Hills Condominium Association (Tara Hills) sued its condominium developer, Gaughan Land, Inc. (GLI), alleging several violations of the disclosure requirements of Minnesota's Uniform Condominium Act (Act). See Minn.Stat. Secs. 515A.1-101 to 4-118 (1980). On the parties' motions for summary judgment, the trial court held that GLI did not violate certain provisions of the Act, but the court denied summary judgment on other alleged violations because questions of fact existed. The court refused to address one alleged violation, believing the parties had settled this issue. Final partial summary judgment was entered after the trial court made the necessary express findings under Minnesota Rules of Civil Procedure 54.02 and Rules of Civil App. Procedure 104.01. Tara Hills appeals. We affirm.
In 1981 and 1982, GLI developed Tara Hills Condominium, a complex of five multi-unit buildings containing a total of 42 residential units. As part of its development, GLI submitted its site plan to the St. Paul Office of Planning and Economic Development for approval. The plan did not provide for construction of any retaining walls. The city approved the plan, noting that no retaining walls were included in the plan and that none would be approved. Any changes in the plan had to be approved by the Planning Office. Nevertheless, GLI built three retaining walls. GLI's director of planning testified in his deposition that city personnel were aware of the construction of the retaining walls. Once constructed, the retaining walls encroached on the surface as well as the subsurface of adjoining property.
GLI provided each prospective condominium purchaser with a disclosure statement, as required by Minn.Stat. Sec. 515A.4-106(a). Failure to provide the statement and any amendments to the statement subjects the declarant to a penalty whereby a purchaser can recover from the declarant up to 5% of the unit sale price. GLI's disclosure statement contained four statements which are the subject of this appeal. GLI stated: (1) that there were no amenities other than two tot lots; (2) that there was not a current balance sheet and that attached as an exhibit was a proposed balance sheet for the first year's operating expenses; (3) that there were no liens, defects, or encumbrances on or affecting the title to the condominium; and (4) that declarant warranted the buildings as set forth in Minn.Stat. Secs. 515A.4-111 and 515A.4-112.
Only one tot lot was ever built. At some point, the retaining walls began to bow. The parties' relationship became strained and Tara Hills eventually sued GLI, alleging several violations of Minnesota's Uniform Condominium Act. Tara Hills brought a motion for partial summary judgment solely on GLI's liability under the 5% penalty provision of section 515A.4-106 for failing to provide any disclosure statement. Tara Hills further moved for summary judgment on other alleged violations of the disclosure requirements. Specifically, Tara Hills alleged that GLI failed to disclose the terms of the warranties and the existence and maintenance costs of the retaining walls. Tara Hills also alleged that GLI falsely disclosed the number of tot lots, that no title defects existed, and that the condominium conformed to zoning and land use regulations. Prior to the hearing on the motion, the parties met in chambers with the trial judge. Their conference was not recorded, but during the conference, the tot lot issue was discussed and settled, GLI apparently having offered to build a second tot lot.
The trial court held that GLI did not violate the provisions of section 515A.4-106. The court also held that GLI did not violate the disclosure requirements concerning the warranty terms and the retaining walls. 1 The court, however, denied summary judgment on the issues of title defects and land use regulation violations because questions of fact existed as to these allegations. The court did not consider the tot lot issue because the parties had reached a settlement.
Tara Hills moved for reconsideration, which the court denied. In its order denying reconsideration, the court incorporated a letter to Tara Hill's counsel explaining that the tot lot issue had been settled by the parties and had been removed from the court's consideration. Tara Hills subsequently submitted an amended statement of proceedings to the court concerning the conference where the tot lot issue was discussed. Tara Hills asked the court to approve a statement which made GLI's settlement offer unconditional. The court declined to approve this request because the court could not remember if the settlement was unconditional. GLI then submitted a proposed amended statement of proceedings which the court approved over Tara Hills' objections. This document states the court "found that the tot lot disclosure issue had been resolved by the parties and was therefore moot."
1. Did the trial court err in holding that GLI did not violate Minn.Stat. Sec. 515A.4-106 for failing to provide condominium purchasers with the required disclosure statement?
2. Did the trial court err in holding that the disclosure requirements were satisfied where the disclosure statement referred to the statutory warranties instead of expressly listing them?
3. Did the trial court err in holding that the retaining walls on the condominium grounds were not amenities, but were part of the common elements that were adequately disclosed in the disclosure statement?
4. Did the trial court err in denying summary judgment where questions of fact existed as to alleged title defects and alleged violations of land use regulations?
5. Did the trial court err in refusing to consider the tot lot issue which the parties had settled prior to the hearing on the summary judgment motion?
On appeal, the function of a court reviewing a summary judgment is to determine whether there are any genuine issues of material fact and whether the trial court erred in its application of the law. Betlach v. Wayzata Condominium, 281 N.W.2d 328, 330 (Minn.1979). The reviewing court must view the facts in a light most favorable to the losing party. Twin City Construction Co. v. ITT Industrial Credit Co., 358 N.W.2d 716, 718 (Minn.Ct.App.1984). If any doubt exists as to the existence of a genuine issue as to a material fact, the doubt must be resolved in favor of finding that the fact issue exists. Rathbun v. W.T. Grant Co., 300 Minn. 223, 230, 219 N.W.2d 641, 646 (1974).
1. GLI is the developer of Tara Hills Condominiums and is the declarant here. Declarant means "any person who has offered prior to creation of a condominium to dispose of his interest in a unit to be created and not previously disposed of." Minn.Stat. Sec. 515A.1-103(9)(b). Under Minnesota's Uniform Condominium Act, a declarant must provide a purchaser with a disclosure statement not later than the date of the purchase agreement. Id. Sec. 515A.4-106(a). Failure to provide a disclosure statement entitles the purchaser to receive from the declarant up to 5% of the unit sale price. Id. Sec. 515A.4-106(c). The information required in the disclosure statement is listed in section 515A.4-102.
GLI argues that it provided the disclosure statement as required by section 515A.4-106(a) and cannot be liable under the separate 5% penalty provision of section 515A.4-106(c). Tara Hills concedes that its unit purchasers received a disclosure statement. It claims, however, that the statement is deficient under the specific requirements of section 515A.4-102 and that the deficiencies are tantamount to a failure to provide the required disclosure statement altogether. Tara Hills challenges the sufficiency of the disclosure statement, insisting that a statement that does not disclose the information required under section 515A.4-102 cannot be a disclosure statement for purposes of section 515A.4-106(a). To achieve the protection envisioned by the disclosure requirements, Tara Hills argues that the requirements must be strictly enforced against GLI and that any defects in disclosure give rise to liability under the separate 5% penalty provision. See Graff, Minnesota Uniform Condominium Act: The View of Developers' Counsel, 10 Wm. Mitchell L. Rev. 71, 93 (1984).
Section 515A.4-106(a) requires only that a declarant provide a disclosure statement not later than the date of the purchase agreement. Although the content of a disclosure statement is not beyond scrutiny, once the statement containing the required information is delivered, a declarant is no longer subject to liability under the special 5% penalty provision.
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United Fire & Cas. Co. v. Fid. Title Ins. Co., s. 00-2595
...("A title that may force the purchaser into litigation to remove defects is not a marketable title."); Tara Hills Condo. Ass'n v. Gaughan, 399 N.W.2d 638, 643 (Minn. Ct. App. 1987) (referring to "defects" as those both real and apparent that affect marketability); Simon Home Builders, Inc. ......