RICHARD D. JOHNSON, CourtAdministrator/Clerk

July 10, 2014

Richard Allen Davis, III Chmelik, Sitkin & Davis 1500 Railroad Ave 

### Bellingham, WA, 98225-4542 rdavis@chmelik.com 

### The Courtof Appeals ofthe 

### StateofWashington

D Murphy Evans Brownlie Evans Wolf & Lee LLP 230 E Champion St Bellingham, WA, 98225-4548 murphy@brownlieevans.com

CASE #: 70329-3-I Sudden Valley Community Association. App v. Curt Casey. Dave Scott, Barbara Volkov. Resps

Counsel: DIVISION 1 One Union Square 600 University Street Seattle, WA 98101-4170 (206) 464-7750 TDD: (206)587-5505



### Enclosed please find a copy of the order granting motion to publish opinionentered by this court inthe above case today. Sincerely,

Richard D. Johnson Court Administrator/Clerk
emp enclosure

c: The Honorable Ira J. Uhrig Reporter of DecisionsUUUh i oi" Mri-'.c.m.i Ui"
. SWE CF WASHINGT0:1 

### ZOIUUL 10 AH S: 2U

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

CURT CASEY, DAVE SCOTT, BARBARA VOLKOV, Washington residents, Respondents,

v. SUDDEN VALLEY COMMUNITY ASSOCIATION, a Washington homeowners' association, Appellant. NO. 70329-3-1 DIVISION ONE

ORDER GRANTING MOTION TO PUBLISH OPINION



### Appellant Sudden Valley CommunityAssociation moved on June 10, 2014, to 

### publish the opinionfiled May 27, 2014, and the respondents have no objection. The court has determined thatthe motion should be granted. Therefore, it is ORDERED that the motion to publish opinion is granted. 

### DATED this \0~ day of July 2014. FOR THE PANEL:IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

CURT CASEY, DAVE SCOTT, BARBARAVOLKOV, Washington residents, Respondents,

v. SUDDEN VALLEY COMMUNITY ASSOCIATION, a Washington homeowners' association, Appellant. NO. 70329-3-1 DIVISION ONE

PUBLISHED OPINION FILED: May 27, 2014



### Lau, J. —This case involves a dispute overthe process governing approval of homeowner association dues and assessment increases. Sudden Valley Community 

### Association (Association) appeals the trialcourt's declaratoryjudgmentorderin favor of several Association members. The Association contends that the trial court erred in 

### concluding that (1) its procedure for approving increases inannual homeowners' assessments and (2) its process ofadopting "spending plans" to adjust expenditures due to decreased revenues violates the homeowners' association act (Act), chapter 

### 64.38 RCW. Because the Act prohibits neither action, we reverse and remand with70329-3-1/2


### instructions to enterdeclaratory reliefandjudgment inthe Association's favor consistent 

### with this opinion. We also reverse the trialcourt's award ofattorney fees to plaintiffs and award the Association its appellate attorney fees as the prevailing party underthe Act's attorney fees provision. FACTS Association's Budget and Assessment Policies under Bylaws and RCW 64.38.025 

### Sudden Valley Community Association is a nonprofit corporation and homeowners' association inWhatcom County. The Association is comprised of3,204 

### lots, plus a variety ofcommon amenities, including a golfcourse, community center, marina, swimming pools, and a fitness facility. 

### The Association is governed by its restrictive covenants, articles ofincorporation, 

### bylaws, and Washington state laws. Anine-memberboard of directors is responsible for its affairs, including adoption ofannual budgets subjectto ratification bythe Association's members. The board is elected bythe Association's members at the 

### annual general meeting. Members have one vote foreach Sudden Valley lot they own, 

### meaning there are 3,204 possible votes at any membership meeting. Amajorityof the possible votes at a membership meeting is 1,603. The Association derives revenue from a variety ofsources, including annual dues and assessments1 levied on its members, leases of building space to third parties, and 

### usage fees for the swimming pools, fitness center, golfcourse, and marina. Since its incorporation in 1973, Association bylaws provided that annual dues and assessments


### 1The parties refer to the terms "dues" and "assessments" interchangeably. -2-70329-3-1/3

must be established by the Board and approved by the members. Article III, section 19 ofthe bylaws requires approval of annual dues and assessments or special 

### assessments by 60 percentofthe members voting at a meeting. No bylaws govern the process for adoption ofthe annual budget. The Association holds its annual general membership meeting in November and special general meetings as needed. Each yearthe Association presents to its members a 

### budgetfor ratification under RCW 64.38.025(3),2 which provides thatthe budget is ratified unless a majority of votes in the Association reject it. The Association has historically viewed the bylaws' article III, section 19 as the exclusive means to increase the annual dues and assessments. According to the 

### Association, RCW 64.38.025(3)'s budget ratification procedure applies only to budget adoption and not to dues and assessment increases. The proposed budgetcontains the Association's projected expenses and projected revenues from all sources, 

### including annual dues and assessments. See Clerk's Papers (CP) at 312-13 (2009 proposed operating budget); CP at 348 (2010 recommended annual operating budget); CP at 381 (2011 proposed operating budget). Ifthe Board proposes an increase inthe annual dues and assessments for the following year, the Association offers a separate
measure for the membership to approve under article III, section 19 ofthe bylaws. The board includes the additional revenue from that increase in the proposed budget. If, however, the members ratify the budget but rejectthe increase measure, the projected
revenue inthe budget is overstated. This occurred inyears 2010, 2011, and 2012. The board dealt with the revenue shortfall by adopting a "spending plan" for each ofthose 

### 2As discussed below, this provision is partofthe Act, chapter 64.38 RCW. -3-70329-3-1/4


### years. This was an orderly method forthe board to adjust expenditures to ensure that annual expenditures did not exceed actual revenues. 

### Due to article III, section 19's elevated (60 percent) approval threshold, most 

### efforts to increase annual dues and assessments have failed. InAugust2011, the board passed a motion rejecting the article III, section 19 voting procedures. It implemented a new process to increase the approval chances at the 2011 annual 

### membership meeting. The August 22 meeting minutes state the rationale for the motion and quote the motion itself: 

### Our experience at our last several AGM [annual membership meetings] has been consistent. Each yearour budget is approved butthe dues proposal is defeated. 

### Something like50% ofthe members vote. Since approval ofthe dues under our Bylaws requires a super majority of 60% ofthose voting, 20% ofthe membership can and has blocked all dues increases, except one small one for the pools. To preventthis from happening atthe coming AGM, Imove: 

### That at the AGM, the results ofthe vote on the regular budgetfor Operations, Road and Capital be increased inthe Operations Budgetto subsidize the costofthe pools and the Special Budgetfor the Capital Repair, Replacement, Reserve Fund be determined in accordance with 

### Washington State Law, RCW 64.38.025, which provides thatthe Budget, including the Dues to support it is approved unless a majority ofthe membership rejects it. (Emphasis added.) The board combined the vote on dues and assessments with the vote on the budget. The resultwas an overwhelming rejection ofthe combined 

### measure, based on fewer than 50 percentofthe total possible votes in the Association.3 Underthe new process, the board achieved its goal of increasing dues and assessments despite the members' overwhelming vote to reject it.



### 3Voting results: 658 approved and 1249 rejected the increase. Under RCW 64.38.025(3), 1605 votes were needed to reject. -4-70329-3-1/5 Following the election of new board members, the board voted to rescind the August 22, 2011 motion and to reinstate the article III, section 19 procedure for voting

on dues and assessment increases. The Board also treated the dues and assessment increase as invalid because a 60 percent voting majority failed to approve itas required under article III, section 19. The Association continued to assess and collect annual dues and assessments at the level established by the membership's March 2008 vote. The Association submitted no updated 2012 budgetto the membership for ratification, but itadopted a 2012 "spending plan" instead. Lawsuit In September2012, several individual Association members ("plaintiffs") filed a complaint againstthe Association seeking declaratory and injunctive relief. Plaintiffs requested the courtto declare that (1) "RCW 64.38.025 governs [the Association's] 

### adoption ofany proposed dues assessment and overrides Article III, Section 19 ofthe Bylaws," (2) "RCW 64.38.025 governs [the Association's] adoption ofany budgetor special budget," (3) "RCW 64.38.025 requires that any proposed budget submitted to 

### the membership for ratification must include any proposed dues assessments for the time period covered by the proposed budget," (4) "RCW 64.38.025 prohibits [the Association] board from adopting a revised budget or 'spending plan' that has not been 

### previously ratified or approved bythe membership." Plaintiffs also requested injunctive reliefcorresponding to the relief quoted above. The Association's answerdenied that the spending plans were revised budgets 

### requiring ratification. Itrequested declaratory reliefand specifically asked the courtto 

### declare, among otherthings, that (1) article III, section 19 ofthe bylaws governs the
-5-70329-3-1/6 

### voting approval threshold for increases indues and assessments, (2) RCW 64.38.025's ratification threshold does not apply to approval of increases inthe Association's dues 

### and assessments, (3) the Board's approval of a spending plan does notconstitute adoption of a regular or special budget requiring ratification under RCW 64.38.025, 

### (4) "Onthose occasions when anticipated revenues in the budgetratified by the membership are not metbecause ofthe failure ofthe membership to approve an increase indues and assessments, the Board may adopt and follow a spending plan without submitting the spending plan to the membership for ratification," and (5) "That 

### the Board of [the Association] has the authority underthe Bylaws to govern the Association which includes, inter alia, making financial decisions which vary from the budget ratified by the membership." 

### In February 2013, both parties moved for summaryjudgment. Each party asked the courtto enter a declaratoryjudgment adopting its respective position on whether 

### RCW 64.38.025 or article III, section 19 governed the Association's adoption ofdues and assessment increases. The court heard oral argument. On May 7, 2013, the court 

### issued an amended declaratoryjudgment ruling in plaintiffs' favor. The court determined: 1. Any dues and assessment measure proposed by the Sudden Valley 

### Community Association must be ratified by membership vote inaccordance with the requirements of RCW 64.38.025. To the extentthat RCW 64.38.025 (the "statute["] and Article III, Section 19 ofthe [Association] Bylaws are inconsistent, the statute governs. 

### 2. RCW 64.38.025 requires [the Association] to submitto its membership for ratification vote a unified budget proposal that includes both proposed expenditures and proposed revenues in a single measure. 3. The [Association] Board's practice of adopting "spending plans" without submitting such plans to a ratification vote ofthe membership violates RCW 64.38.025.
-6-70329-3-1/7

The court also awarded attorney fees to plaintiffs under RCW 64.38.050. The Association appeals. ANALYSIS Standard of Review Where, as here, the facts are undisputed and the only issues are questions of law, the standard of review is de novo. Shaferv. Bd. ofTrustees of Sandy Hook Yacht 

### Club Estates. Inc.. 76 Wn. App. 267, 273, 883 P.2d 1387 (1994). Questions ofstatutory construction are reviewed de novo. State v. Votava. 149 Wn.2d 178, 183, 66 P.3d 1050 

### (2003). "The primary goal ofstatutory interpretation is to ascertain and give effectto the 

### legislature's intent and purpose." In re Condemnation Petition ofSeattle Popular Monorail Auth.. 155 Wn.2d 612, 627, 121 P.3d 1166 (2005). We read the statute as a 

### whole to give effectto all language used. Inre Pers. RestraintofSkvlstad. 160 Wn.2d 944, 948, 162 P.3d 413 (2007). Bylaws and the Act The Association contends that article III, section 19's 60 percent approval 

### requirementgoverns the establishmentand approval ofannual dues and assessments. Plaintiffs claim that the Act controls the process for imposing dues and assessments. 

### Plaintiffs rely mainlyon RCW 64.38.025(3)'s budget approval process.4 RCW 64.38.025(3) provides:



### 4At itscore, plaintiffs'contention depends on the unsupported claim that the 

### budget approval process is synonymous with the process for imposingdues and assessments.

-7-70329-3-1/8 

### Within thirty days after adoption by the board of directors of any proposed regular or special budgetof the association, the board shall set a date for a meeting of the owners to consider ratification ofthe budget not less than fourteen nor more than sixty days after mailing ofthe summary. Unless atthat meeting the owners of a majority ofthe votes in the association are allocated or any larger percentage specified in the governing documents reject the budget, in person or by proxy, the budget is ratified, whether or not a Quorum is present. In the event 

### the proposed budget is rejected or the required notice is not given, the periodic budget last ratified by the owners shall be continued until such time as the 

### owners ratify a subsequentbudget proposed bythe board ofdirectors. 

### (Emphasis added.) Plaintiffs do not argue this section is ambiguous. Indeed, the statute's plain language addresses the process for approving the budget,5 not the process for imposing dues and assessments. Nowhere is "assessment" mentioned. 

### We decline to read into this plainly written clause a meaning the legislature never intended. 

### Other provisions of the Act6 govern assessments. The Actdefines "assessment"

as "all sums chargeable to an owner by an association in accordance with RCW 

### 64.38.020." RCW 64.38.010(1). RCW 64.38.020(2) empowers the association to



### 5The Actprovides no definition for "budget." When a statute fails to define a term, a court may rely on the ordinary meaning ofthe word as stated in a dictionary. See Budget Rent A Car Corp. v. Dep't of Licensing. 144Wn.2d 889, 899, 31 P.3d 1174 (2001). "Budget" is ordinarily defined as "[a] statementofan organization's estimated 

### revenues and expenses for a specified period, [usually] a year" or "[a] sum ofmoney allocated to a particular purpose or project." Black's Law Dictionary 221 (9th ed. 2009). "Budget" means "1. an estimate, often itemized, ofexpected income and expense for a given period inthe future. 2. a plan ofoperations based on such an estimate. 3. an itemized allotment offunds, time, etc., for a given period. 4. the total sum ofmoney set aside or needed for a purpose: the construction budget." Dictionary.com (lastvisited May 12, 2014) (emphasis omitted). 

### 6The Actwas enacted in 1995 and addresses the rights and responsibilities of homeowners' associations. The Act is based on the Uniform Common Interest Ownership Act (UCIOA) as drafted by the National Conference of Commissioners on Uniform State Laws in 1994.
-8-70329-3-1/9 

### "[a]dopt and amend budgets for revenues, expenditures, and reserves, and impose and collect assessments for common expenses from owners." (Emphasis added). And 

### under RCW 64.38.020(11), the association may "[i]mpose and collectcharges for late payments ofassessments ...." That section further provides forthe levy of fines 

### following notice and an opportunityto be heard.7 None of the provisions governing assessments mentions or requires dues and assessments to be approved under RCW 

### 64.38.025(3)'s budget ratification process. The Act's statutory scheme treats budgets and assessments as distinct subjects. See, e.g.. RCW 64.38.020. 

### Plaintiffs also argue that because the proposed budgets included the proposed
revenues from dues and assessment increases, RCW 64.38.025's budget ratification procedure also applies to the projected dues and assessment revenue. As discussed above, the Act's plain language undermines this assertion. The Act also neitherprohibits nor limits the Association's authority 

### to levy dues and assessments under a process outlined in its governing documents. RCW 68.34.020 enumerates the powers that a homeowners' association may exercise "[u]nless otherwise provided inthe governing documents," including the powerto "[a]dopt and amend bylaws, rules, and regulations;" "[a]dopt and amend budgets for revenues, expenditures, and reserves, and impose and collect assessments for 7Section 3-102 ofthe UCIOA provides for "Powers of Unit Owners' Association" and contains language similarto that in RCW 64.38.020. Section 3-102 states that the association may "adopt and amend budgets for revenues, expenditures, and reserves and collect assessments for common expenses from unit owners." Section 3-102(a)(2). The association may also "exercise any other powers conferred by the declaration or bylaws." Section 3-102(a)(15). The commentary to the UCIOA states, "The declaration may limitthe right ofthe association to exercise any ofthe listed powers, except in a manner which discriminates in favor of a declarant." Comment 4 to Section 1-104 (discussing Section 3-102 (Powers ofthe Association)). -9-70329-3-1/10



### common expenses from owners;" "[e]xercise any otherpowers conferred by the bylaws;"and "[e]xercise any other powers necessary and properfor the governance and operation ofthe association." RCW 64.38.020(1), (2), (12), (14). The Act's definition of "governing documents" is broad and expressly includes covenants and bylaws. RCW 

### 64.38.010(10). Here, the bylaws authorize the Association's process forestablishing and increasing dues and assessments. 

### Plaintiffs also rely on RCW 64.38.025(4)8 and RCW 64.38.0359 to argue that these provisions indicate the legislature intended that approval of a budget



### 8RCW64.38.025(4) provides: "As partofthe summary ofthe budget provided to all owners, the board ofdirectors shall disclose to the owners: 

### "(a) The currentamountofregular assessments budgeted forcontribution to the reserve account, the recommended contribution rate from the reserve study, and the funding plan upon which the recommended contribution rate is based; 

### "(b) Ifadditional regularor special assessments are scheduled to be imposed, the date the assessments are due, the amount ofthe assessments pereach owner per month oryear, and the purpose ofthe assessments; 

### "(c) Based upon the most recent reserve study and other information, whether currently projected reserve account balances will be sufficient atthe end ofeach yearto meetthe association's obligation for major maintenance, repair, or replacement of reserve components during the next thirty years; "(d) Ifreserve account balances are not projected to be sufficient, what additional assessments may be necessary to ensure that sufficient reserve accountfunds willbe available each year during the next thirty years, the approximate dates assessments may be due, and the amount ofthe assessments perowner per month oryear; "(e) The estimated amount recommended in the reserve account at the end of the currentfiscal year based on the most recent reserve study, the projected reserve account cash balance at the end ofthe currentfiscal year, and the percentfunded atthe date ofthe latest reserve study; "(f)The estimated amount recommended inthe reserve account based upon the most recent reserve study at the end of each ofthe next five budgetyears, the projected reserve accountcash balance in each ofthose years, and the projected percentfunded for each ofthose years; and "(g) Ifthe funding plan approved by the association is implemented, the projected reserve account cash balance in each ofthe nextfive budget years and the percent funded for each ofthose years." -10-70329-3-1/11 automatically means approval of dues and assessments. In otherwords, a favorable vote to ratify a budget also results in approval of a dues and assessment increase. 

### The plain language of RCW 64.38.025(4) fails to support plaintiffs' argument. The "summary ofthe budget" that homeowners' associations provide to members has 

### nothing to do withwhetherthe budget ratification process automatically imposes a binding assessmentobligation on members. The purpose ofthe summary is to explain
a capital reserve document—which makes 30-yearprojections—in terms easily understood by its members. Itinforms members whether the association can fund its 

### capital projects inthe coming years and how itplans to do so. Legislative history10 also shows that RCW 64.38.025(4) is a disclosure requirement.11 RCW 64.38.025(4) fails to support plaintiffs' argument.



### 9This provision states inrelevant part: "(1) Ameeting ofthe association must be held at leastonce each year. Special meetings ofthe association may be called by the president, a majority ofthe board of directors, or by owners having ten percentofthe votes inthe association. (3) The notice of any meeting shall state the time and place ofthe meeting and the business to be placed on the agenda by the board of directors for a vote by the owners, including the general nature of any proposed amendment to the articles of incorporation, bylaws, any budget or changes in the previously approved budgetthat result in a change in assessment obligation, and any proposal to remove a director." 

### RCW 64.38.035(1) (emphasis added). Subsection (3) addresses voting on (1) budgets and (2) proposed changes to a previously approved budgetthat result in a change in 

### assessmentobligation. See RCW 64.38.035(3). 

### 10 Legislative history may be ofsome interest even where the court concludes that the statute's plain language is unambiguous. Scottv. Cascade Structures. 100 Wn.2d 537, 544, 673 P.2d 179 (1983). "This is particularly so where the contemporaneous record of a bill's progress bolsters the plain meaning." Lane v. Port ofSeattle. 178 Wn. App. 110, 119 n.3, 316 P.3d 1070 (2013). 

### 11 See FinalB. Rep. on Engrossed Substitute H.B. 1309, at 3, 62d Leg., Reg. Sess. (Wash. 2011) ("Homeowners' associations are encouraged to establish reserve -11-70329-3-1/12 

### Plaintiffs rely on RCW 64.38.035 for the firsttime on appeal. Nonetheless, RCW 64.38.035(3) does not apply here. Itmerely makes RCW 64.38.025(3)'s budget 

### ratification procedure applicable to changes in a previously approved budgetthat result in a change inassessments—an unremarkable requirement given the Act's strong emphasis on notice and protecting members. Plaintiffs repeatedly refer to RCW 64.38.005 for support. Itprovides, "The intent 

### of this chapter [the Act] is to provide consistent laws regarding the formation and legal administration of homeowners' associations." RCW 64.38.005. The House Bill Report for the Act states: The bill is needed to deal with common complaints received from members of homeowners' associations. The billprovides a set of basic rules and procedures by which homeowners' associations mustoperate in orderto protect individual association members. The board of directors of some homeowners' associations currently do not provide members notice oftheir actions and imposition of assessments. The board needs to be accountable to the members of the association and needs to make decisions based on the association's interests. H.B. Rep. on H.B. 1471, 54th Leg., Reg. Sess. (Wash. 1995). Plaintiffs argue thatthe legislature's use ofthe term "consistent laws" in the intent statement means the legislature intended all homeowners' associations to impose dues in a uniform manner. But neitherthe Act's language nor its legislative history suggestthe legislature was attempting to create comprehensive procedural rules. The legislature was concerned

accounts, supplemental to the annual operating budget, to fund major maintenance, repair, and replacement ofcommon elements.... HOAs must disclose information to owners regarding reserve accounts and reserve studies with the summary ofthe annual 

### budget.") (emphasis added)); H.B. Rep. on Engrossed Substitute H.B. 1309, at4, 62d Leg., Reg. Sess. (Wash. 2011) (same); S.B. Rep. on Engrossed Substitute H.B. 1309, at 3, 62d Leg., Reg. Sess. (Wash. 2011) (same). •12-70329-3-1/13 

### withprotecting members from lack of information. Nothing indicates the legislature intended to go further. 

### Plaintiffs also rely on provisions from the closely related Condominium Act, 

### chapter64.34 RCW. They cite RCW 64.34.308(3) and (4)12—which are nearly identical

12 These subsections provide: 

### "(3)Within thirtydays after adoption of any proposed budgetfor the condominium, the board ofdirectors shall provide a summary ofthe budgetto allthe 

### unitowners and shall set a date for a meeting ofthe unitowners to considerratification 

### of the budget not less than fourteen nor more than sixtydays aftermailing of the summary. Unless at that meeting the owners of units to which a majority of the votes in the association are allocated or any larger percentage specified in the declaration reject 

### the budget, the budget is ratified, whether or not a quorum is present. In the event the proposed budget is rejected or the required notice is not given, the periodic budget last ratified by the unitowners shall be continued until such time as the unitowners ratify a subsequentbudgetproposed bythe board ofdirectors. 

### "(4) As part of the summary of the budget provided to all unit owners, the board of directors shall disclose to the unit owners: 

### "(a) The current amountof regularassessments budgeted for contribution to the reserve account, the recommended contribution rate from the reserve study, and the 

### funding plan upon which the recommended contribution rate is based; 

### "(b) Ifadditional regular or special assessments are scheduled to be imposed, the date the assessments are due, the amount ofthe assessments per each unit per 

### month or year, and the purpose ofthe assessments; 

### "(c) Based upon the most recent reserve study and other information, whether 

### currently projected reserve accountbalanceswill be sufficientat the end ofeachyear to meet the association's obligation for majormaintenance, repair, orreplacementof reserve components during the nextthirty years; 

### "(d) Ifreserve accountbalances are not projected to be sufficient, whatadditional assessments may be necessarytoensurethat sufficient reserve accountfunds will be available each yearduring the next thirtyyears, the approximate dates assessments 

### may be due, and the amountof the assessments per unit per month or year; 

### "(e) The estimated amount recommendedin the reserve account at the end of the current fiscalyearbased on the most recent reserve study, the projected reserve accountcash balance at the end of the currentfiscal year, and the percentfunded at the date ofthe latest reserve study; 

### "(f) The estimated amount recommended in the reserve accountbased upon the 

### most recent reserve study at the end of each of the nextfive budget years, the projected reserve accountcash balance ineach ofthose years, and the projected percentfunded for each ofthose years; and -13-70329-3-1/14


### to RCW 64.38.025(3) and (4) quoted above—as well as RCW 64.34.360(1 )'s requirementthat "Afterany assessment has been made by the association, assessments must be made against all units, based on a budget adopted by the association." Plaintiffs contend that the Act "was clearly based on [the Condominium Act]." Resp't's Br. at 27. To the extent RCW 64.34.360(1) requires assessments to be ratified at the same 

### time and bythe same process underthe Condominium Act,13 the legislature did not use the same language in the homeowners' association act. Itdid not say—as it did for 

### condominiums in RCW 64.34.360—that assessments must be based on the budget.14 "(g) Ifthe funding plan approved by the association is implemented, the projected reserve account cash balance ineach ofthe nextfive budgetyears and the percent funded for each ofthose years." RCW 64.34.308(3), (4). 

### 13 We question this premise, as the language cited does not appearto require thatconclusion and plaintiffs cite no legislative history orother supportfor this argument. 14 Further, like the homeowners' association act, the Condominium Act was 

### based on the UCIOA. The UCIOAcontains a provision nearly identical to RCW 64.34.360(1): "Until the association makes a common expense assessment, the declarant shall pay all common expenses. After an assessment has been made by the association, assessments must be made at least annually, based on a budget adopted at least annually by the association." Section 3-115(a). The UCIOA commentary indicates this provision was intended to ensure fairness in assessments against all units: "[0]nce an assessment is made against any unit, all units, including those owned by the declarant, must be assessed for theirfullportion ofthe common expense liability." Comment 1 to Section 3-115. The official comments to RCW 64.34.360 contain identical language. See Washington Condominium Act Official Comments to RCW 64.34.360; see also opening comments to the Washington Condominium Act ("These comments are not partof the statute itself, butwere published by the committee to help explain the intentions ofthe statute drafters as an aid to interpretation ofthe statute."). Even ifthe legislature had included a similar provision inthe homeowners' association act, nothing in the commentary supports plaintiffs' position. We also note that even outside the context of RCW 64.34.360 discussed above, 

### nothing inthe officialcomments to the Condominium Act or the commentary to the -14-70329-3-1/15
Where the legislature expressly includes a provision inone statute but not another, we may presume that the exclusion was intentional. See, e.g.. State v. Delgado. 148 Wn.2d 723, 728-29, 63 P.3d 792 (2003); In re Pet, ofWilliams. 147 Wn.2d 476, 491, 55 

### P.3d 597 (2002). We conclude thatthe Act conveys a plain meaning. Itcontains no requirementthat dues and assessments imposed by the Association must be approved in accordance with RCW 64.38.025(3)'s budget ratification process. "Spending Plans" The Association argues the courterred indetermining that the adoption of "spending plans" without a membership vote violates RCW 64.38.025. Itcontends the 

### spending plans merely reflect reductions inexpenditures necessitated by underfunded budgets. Plaintiffs respond that the spending plans are essentially revised budgets that must be submitted to the membership for ratification. Plaintiffs "do not deny that the board has authority to adjust spending to deal with changes incircumstances that take place during the fiscal year afterthe budget is

UCIOA supports plaintiffs' position. Both documents express legislative intentto permit an association's declaration to limitthe right ofthe association to exercise any of its listed powers. See Comment4 to UCIOA Section 1-104 ("The declaration may limitthe right ofthe association to exercise any ofthe listed powers, except in a mannerwhich discriminates infavor of a declarant.") (discussing Section 3-102 ("Powers ofthe Association")); Washington Condominium Act Official Comments to RCW 64.34.030 (same; discussing RCW 64.34.304 ("Powers of Unit Owners' Association")). Both 

### confergreat leeway as to what is included inthe bylaws. See Comment4 to Section 1- 104 ("Subjectto the provisions ofthe declaration, the bylaws may contain any matterin addition to that required by the Act.") (discussing Section 3-106 ("Bylaws")); Washington Condominium Act Official Comments to RCW 64.34.030 (same; discussing RCW 64.34.324 ("Bylaws")). Thus, to the extentthe Condominium Act is useful here, it supports the Association's argument rather than plaintiffs' interpretation.

•15-70329-3-1/16 

### approved by the membership."15 Resp't's Br. at 30. However, citing RCW 64.38.035(3)'s notice requirementfor "any budget orchanges inthe previously 

### approved budgetthat result in a change inassessmentobligation," they argue that spending plan approval requires notice and a vote. Plaintiffs contend only "unanticipated changes incircumstances," such as a tenant defaulting on its lease, a 

### downturn in the economy, or other necessary budgetchanges "that are unrelated to the 

### level ofdues assessed bythe association," are excluded from RCW64.38.035(3)'s notice requirement. Resp't's Br. at 30. They acknowledge that "RCW 64.38.035 does 

### not require the association to give its membership notice of a change in the budgetthat is not related to a change inassessments." Resp't's Br. at 30. However, they claim that here, the spending plans were caused bychanges in the dues and assessment 

### obligationbecause the members rejected the proposed increases, resulting in underfunded budgets. 

### Plaintiffs' assertion is undermined by the notice requirement's plain language. 

### The statute requires no notice ofchanges to the budgetthat result from a change in assessmentobligation. Itrequires notice ofchanges to the budgetthat result in a 

### change in assessmentobligation. Itis undisputed that none of the Association's 

### "spending plans" resultedin changes in the assessmentobligation. The spending plans outlined expenditure cuts resulting from a dues and assessmentincrease rejection. The 15 Indeed, "[association management must perform its budgeting and setand collect its assessments withsuch potential future developments in mind. Noone can know in advance what costs willbe demanded, or when. It is inescapable that some 

### exigencieswill arise and that the association must be able to respondwith urgently needed cash while keeping itselffiscally sound." James L. Winokur, Critical Assessment: The Financial Role of Community Associations, 38 Santa Clara L. Rev. 1135,1162(1998). -16-70329-3-1/17
dues and assessmentobligation remained the same as itwas in 2008, the last time the members approved an increase. Plaintiffs also rely on RCW 64.38.025(3), which specifies that if a budget is rejected, the Association must revert to the budget last ratified by the membership. Plaintiffs claim that "[the Association] should have reverted to the budget last ratified by membership vote" ratherthan adopting "spending plans." Resp't's Br. at 33. The 

### statute's plain language defeats plaintiffs' argument. This provision applies only if members reject a proposed budget. It is undisputed that the members did not reject 

### any ofthe proposed budgets here. Instead, they ratified the budgets butrejected dues and assessment increases that partially funded the budgets, thus requiring the Association to adjust spending to accountfor the shortfall. The trial court erred indetermining that the Association's spending plans violate 

### the Act. Nothing in the Actrequires the Association to obtain memberapproval for spending adjustments inthese circumstances. Attorney Fees 

### Both parties requestattorney fees under RCW64.38.050, which states, "Any violation of the provisions of this chapterentitles an aggrieved party to any remedy 

### provided by law or in equity. The court, in an appropriate case, may award reasonable attorneys' fees to the prevailing party." The Association is entitled to attorney fees as the prevailingparty.16
16 Plaintiffsargue this is not an "appropriate case" for the Association to recoup 

### its attorney fees for the sole reason that "it is notappropriate that associations who successfullydefend against allegations that they have violated the Act should recover theirattorney's fees from the members, because the Act is not intended to protect -17-70329-3-1/18

CONCLUSION17 

### For the reasons discussed above, the trial court erred when itgranted 

### declaratory reliefinplaintiffs' favor. We reverse the trial court's declaratory judgment orderand remand withinstructions to enterdeclaratory reliefandjudgmentin the Association's favor consistentwith this opinion. We also reverse the trial court's award 

### of attorney fees to plaintiffs and award appellate attorneyfees to the Association subject to its compliance with RAP 18.1.

WE CONCUR:

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### associations from their members, and awarding associations their attorney's fees whenever they successfully defend would only discourage such suits and reduce the 

### likelihood thatthe Actwill be enforced." Resp't's Br. at43. They cite no authorityfor this argument, and they misconstrue the statute. On its face, RCW 64.38.050 does not limitan award offees to aggrieved homeowners but does allow fees to the "prevailing party." This allows homeowners' associations, which are funded by the community as a whole, to recoup expenses incurred indefending against nonprevailing homeowners. 

### 17We decline to address plaintiffs' pastdues collected assertion. This is a declaratoryjudgmentaction and the assertion is raised for the first time on appeal. -18-