Triple Crown at Observatory Vill. Ass'n, Inc. v. Vill. Homes of Colo., Inc.

• Decision Date: 24 October 2013
• Docket Number: Court of Appeals No. 13CA1390
• Citation: 389 P.3d 888
• Parties: TRIPLE CROWN AT OBSERVATORY VILLAGE ASSOCIATION, INC., Plaintiff–Petitioner, v. VILLAGE HOMES OF COLORADO, INC.; Peter Benson; Brian Graves ; Mark McCallum ; Rudy Hansch; Kelly Martinez; Ronald Hettinger; and Elyssa Blazier, Defendants–Respondents.
• Court: Colorado Court of Appeals

389 P.3d 888

TRIPLE CROWN AT OBSERVATORY VILLAGE ASSOCIATION, INC., Plaintiff–Petitioner,

v.VILLAGE HOMES OF COLORADO, INC.; Peter Benson; Brian Graves ; Mark McCallum ; Rudy Hansch; Kelly Martinez; Ronald Hettinger; and Elyssa Blazier, Defendants–Respondents.

Court of Appeals No. 13CA1390

Colorado Court of Appeals, Div. A.

Announced October 24, 2013

Sullan ², Sandgrund, Perczak & Nuss P.C., Scott F. Sullan, Mari K. Perczak, David B. Shaw, Denver, Colorado, for Plaintiff–Petitioner

McConaughy & Sarkissian, P.C., Ivan A. Sarkissian, Christopher J. Metzalfe, Englewood, Colorado, for Defendants–Respondents

Opinion by JUDGE GABRIEL

¶ 1 In this construction-defect action, plaintiff, Triple Crown at Observatory Village Association, Inc. (the Association), petitioned this court, pursuant to C.A.R. 4.2, for interlocutory review of the district court's order granting the motion of defendants, Village Homes of Colorado, Inc., Peter Benson, Brian Graves, Mark McCallum, Rudy Hansch, Kelly Martinez, Ronald Hettinger, and Elyssa Blazier (collectively, the Village Defendants), to enforce an arbitration provision in the Association's declaration. We conclude that the order appealed involves controlling and unresolved questions of law and that our immediate review may promote a more orderly disposition of this litigation. Accordingly, we grant the petition for interlocutory review, setting forth our reasoning below. A later opinion will address the merits of this interlocutory appeal.

I. Background

¶ 2 The Village Defendants created the Association, a Colorado nonprofit corporation, under section 7–122–102, C.R.S.2013, of the Colorado Revised Nonprofit Corporation Act (CRNCA) to manage, maintain, and repair the properties comprising the Triple Crown at Observatory Village condominium community (the Project). Under the Colorado Common Interest Ownership Act (CCIOA), §§ 38–33.3–101 to –402, C.R.S.2013, defendant, Village Homes of Colorado, Inc., as the Project's Declarant, recorded the Declaration of Covenants, Conditions and Restrictions of Triple Crown Homes at Observatory Village Association, Inc. (the Declaration).

¶ 3 As pertinent here, Article 14 of the Declaration established a dispute resolution procedure for claims arising from, among other things, the design or construction of the improvements and structures on the Project.

Article 14 required that the parties arbitrate such claims if good faith negotiation and mediation efforts were unsuccessful. In addition, it appears undisputed that Article 14 could be amended only if the amendment were approved by Association members to which at least sixty-seven percent of the votes in the Association had been allocated, and any such amendment had to be done in compliance with CCIOA.

¶ 4 After disputes arose regarding the Village Defendants' responsibility for alleged construction defects in the Project, the Association sought to revoke Article 14. The Association appears to have obtained the votes to do so from forty-eight percent of the allocated interests within sixty days and sixty-seven percent of the allocated interests within 120 days. The Association then recorded an Amendment to the Declaration and filed this action, asserting claims for negligence and negligent repair, breach of implied warranty, misrepresentation and nondisclosure, violations of the Colorado Consumer Protection Act (CCPA), §§ 6–1–101 to –1121, C.R.S.2013, and breach of fiduciary duty.

¶ 5 The Village Defendants moved to enforce the arbitration provision of Article 14. In this motion, they argued that the Association's revocation of Article 14 was ineffective because the Association had failed to obtain written consent forms from sixty-seven percent of its members within the sixty-day time period set forth in section 7–127–107(2), C.R.S.2013, of the CRNCA. That section provides that no action of a nonprofit corporation taken without a meeting is effective unless the corporation receives the requisite number of member consent forms within sixty days after the earliest dated consent form is received by the corporation. Id.

¶ 6 The Association responded that its action was not subject to the CRNCA's time limit. It contended that CCIOA, and not the CRNCA, was applicable here and that CCIOA contains no sixty-day time limit to obtain the requisite consent forms. Alternatively, it disputed the enforceability of Article 14 on other statutory grounds. The Association further argued that its CCPA claims were not subject to arbitration.

¶ 7 By order dated June 20, 2013, the district court granted the Village Defendants' motion to enforce Article 14. The court reasoned that under section 38–33.3–301, C.R.S.2013, of CCIOA, a unit owners' association like the Association here "shall be organized as a nonprofit, not-for-profit, or for-profit corporation or as a limited liability company in accordance with the laws of the state of Colorado." The court further observed that section 38–33.3–108, C.R.S.2013, of CCIOA provides that the law of corporations, among other laws, "supplement[s] the provisions of this article...."

¶ 8 Because the Association was established as a nonprofit corporation under CCIOA, the court concluded that it was subject both to CCIOA and to the structural and procedural provisions applicable to the chosen entity. In particular, the court determined that the Association was subject to section 7–127–107 of the CRNCA when it sought to amend the Declaration without holding a meeting. Because the Association failed to comply with that statute's sixty-day time limitation, the court concluded that the Association's purported revocation of Article 14 was invalid.

¶ 9 The court further rejected the Association's alternative argument that even if Article 14 survived and required that the Association submit its other claims to arbitration, its CCPA claims were not arbitrable. In holding that the CCPA claims, too, were arbitrable, the court distinguished Ingold v. AIMCO/Bluffs, L.L.C. Apartments, 159 P.3d 116 (Colo.2007), and Lambdin v. District Court, 903 P.2d 1126 (Colo.1995), on which the Association relied.

¶ 10 The Association then filed an unopposed motion for certification of the order pursuant to C.A.R. 4.2. The court granted that motion and certified the following three issues:

1. Whether C.R.S. § 38–33.3–217, the Colorado Common Interest Ownership Act's ("CCIOA's") procedure for amending a common interest community's Declaration by written consent, which imposes no time limit on obtaining such consent, supersedes C.R.S. § 7–127–107, the Colorado Revised Nonprofit Corporation Act ("CRNCA"), which imposes a 60–day time limit for the approval of certain "actions" taken without meetings, such as Declaration amendments.

2. Whether CCIOA's (C.R.S.38–33.3–302(2)'s) prohibition against a Declaration placing restrictions on the "power of the association to deal with the declarant that are more restrictive than the limitations imposed on the power of the association to deal with other persons," renders the Declaration's arbitration provision applicable only to the Declarant void and unenforceable.

3. Whether, as a matter of law, the Association's Colorado Consumer Protection Act ("CCPA") claim is subject to a predispute arbitration requirement inserted in the Declaration by the Declarant.

¶ 11 The Association then filed the present C.A.R. 4.2 petition in this court.

II. Discussion

¶ 12 Section 13–4–102.1(1), C.R.S.2013, provides:

The court of appeals, under rules promulgated by the Colorado supreme court, may permit an interlocutory appeal of a certified question of law in a civil matter from a district court or the probate court of the city and county of Denver if:

(a) The trial court certifies that immediate review may promote a more orderly disposition or establish a final disposition of the litigation; and

(b) The order involves a controlling and unresolved question of law.

¶ 13 C.A.R. 4.2, in turn, provides, in pertinent part:

(a) Discretionary Interlocutory Appeals. Upon certification by the trial court, or stipulation of all parties, the court of appeals may, in its discretion, allow an interlocutory appeal of an order in a civil action....

(b) Grounds for Granting Interlocutory Appeal. Grounds for certifying and allowing an interlocutory appeal are:

(1) Where immediate review may promote a more orderly disposition or establish a final disposition of the litigation; and

(2) The order involves a controlling and unresolved question of law. For purposes of this rule, an "unresolved question of law" is a question that has not been resolved by the Colorado Supreme Court or determined in a published decision of the Colorado Court of Appeals, or a question of federal law that has not been resolved by the United States Supreme Court.

¶ 14 Accordingly, in our discretion, we may grant an interlocutory appeal when (1) immediate review may promote a more orderly disposition or establish a final disposition of the litigation; (2) the order from which an appeal is sought involves a controlling question of law; and (3) that question of law is unresolved. Kowalchik v. Brohl, 2012 COA 25, ¶ 13, 277 P.3d 885, 888.

¶ 15 Here, we conclude that immediate review may well promote a more orderly disposition of the litigation. Were we not to grant immediate review, the parties could potentially arbitrate all of the claims in this case and then the Association could appeal the order compelling arbitration. Were a division of this court to conclude that the district court had erred in enforcing the arbitration provision, the parties would have needlessly expended substantial amounts of time and money. In these circumstances, we conclude that accepting this appeal now would promote a more orderly disposition of the litigation.

¶ 16 We further conclude that each of the certified questions presents an unresolved question of law. Each question involves statutory interpretation, which is a question of law. Clyncke v. Waneka, 157 P.3d 1072, 1076 (Colo.2007)....