COLORADO COURT OF APPEALS 2016COA123 

Court of Appeals No. 15CA0757 

Eagle County District Court No. 09CV320 

Honorable Frederick W. Gannett, Judge 

Arrabelle at Vail Square Residential Condominium Association, Inc., 

Plaintiff-Appellee and Cross-Appellant, 

v. 

Arrabelle at Vail Square LLC, 

Defendant-Appellant and Cross-Appellee. 

JUDGMENT AFFIRMED 

Division III 

Opinion by JUDGE GRAHAM 

Booras and Márquez*, JJ., concur 

Announced August 25, 2016 

Lewis Roca Rothgerber Christie LLP, Scott M. Browning, Alex C. Myers, Denver, 

Colorado; Zonies Law LLC, Sean Connelly, Denver, Colorado, for PlaintiffAppellee and Cross-Appellant 

Gibson, Dunn & Crutcher LLP, Gregory J. Kerwin, Robert C. Blume, M. Scott 

Campbell, Denver, Colorado, for Defendant-Appellant and Cross-Appellee 

*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art. 

VI, § 5(3), and § 24-51-1105, C.R.S. 2015. 
1 

¶ 1 In this case interpreting provisions of the Colorado Common 

Interest Ownership Act (CCIOA), sections 38-33.3-101 to -402, 

C.R.S. 2015, we are asked to determine, among other related 

issues, whether a mixed-use community consisting of a hotel, retail 

shops, restaurants, and sixty-six condominiums is a “small planned 

community” under section 38-33.3-116, C.R.S. 2015, of CCIOA. 

We conclude it is not and, therefore, affirm the judgment of the trial 

court. 

I. Background 

¶ 2 The Arrabelle at Vail Square is a luxury development at the 

base of Vail Mountain in Vail, Colorado. Built and managed by Vail 

Resorts Development Company and Arrabelle at Vail Square LLC 

(Vail Resorts), the development (Arrabelle) includes multi-million 

dollar residential condominiums, a boutique hotel, restaurants, 

retail shops, an ice-skating rink, a spa, parking, and other 

amenities. 

¶ 3 At the time of development, Vail Resorts recorded a plat 

establishing seven separate real estate parcels collectively titled “Lot 

1” and “Airspace Lots A-F” at the Arrabelle. Vail Resorts then 
2 

entered into a Reciprocal Easements and Covenants Agreement 

(RECA) governing those parcels and creating two lots — the 

Airspace Lot (which would be developed into condominiums) and 

the Project Lot (the remainder of the property). The RECA 

establishes benefits, burdens, and allocation of costs between both 

lots, and it regulates the use and enjoyment of both lots. 

¶ 4 In pertinent part, the RECA originally contained the following 

two provisions: 

18. SMALL PLANNED COMMUNITY 

EXCEPTION. The Parties hereby acknowledge 

and agree that this Agreement constitutes a 

“declaration” and creates a “common interest 

community” under CCIOA. Specifically, this 

Agreement creates a “planned community” 

under CCIOA, and not a “condominium,” as 

those terms are defined by CCIOA. The 

planned community created by this Agreement 

contains only two lots, the Project Lot and the 

Airspace Lot, and is therefor exempt from 

CCIOA’s provisions pursuant to the exemption 

contained in Section 38-33.3-116(2) of CCIOA 

for planned communities containing no more 

than 20 lots. The Parties acknowledge and 

agree that the Project Lot and the Airspace Lot 

will not be bound by or subject to the 

provisions of CCIOA, except as expressly 

required under CCIOA, as in effect at the date 

of this Agreement. In addition, the Parties 

acknowledge and agree that neither the Project 

Owner nor the Airspace Lot Owner shall be 
3 

deemed a “master association” within the 

meaning of Section 38-33.3-220 of CCIOA. 

Without limitation on the generality of the 

foregoing, the Parties acknowledge and agree 

that the Airspace Lot constitutes an estate 

above the surface within the meaning of 

Section 38-32-101, et. seq., C.R.S., and not a 

condominium within the meaning of CCIOA; 

the Airspace Lot Owner Easements constitute 

the sole property interest in the Project 

Improvements[1] that is held by the Airspace 

Lot Owner as appurtenances to the Airspace 

Lot; and there are not any “common elements” 

or other portions of the Project Improvements 

in which the Airspace Lot Owner holds any 

undivided or other ownership interest. 

19. CONDOMINIUMIZATION OF AIRSPACE 

LOT. Notwithstanding but without limiting the 

provisions of Section 18 above, the Parties 

acknowledge and agree that the Airspace Lot 

Owner may, at its election, subject the 

Airspace Lot to a condominium regime under 

CCIOA. Regardless of any such 

condominiumization, the Airspace Lot will 

continue to be a single lot for all purposes 

under this Agreement. Any owners’ 

association formed pursuant to CCIOA (the 

“Association”) will be deemed the “Airspace Lot 

Owner,” all owners of such condominium units 

will act and be treated collectively through the 

Association under this Agreement and each 

owner of a condominium unit, by taking title to 

 

1 The RECA defines Project Improvements as “a hotel and related 

amenities, restaurants, a plaza area with an ice skating rink, retail 

space, a parking garage and skier services . . . located on the 

Project Lot.” 
4 

a condominium unit, irrevocably and 

unconditionally appoints the Association as its 

duly authorized representative and attorneyin-fact for all purposes of this Agreement. 

Notwithstanding that the Association shall be 

deemed the “Airspace Lot Owner,” the Airspace 

Lot Owner Easements will be deemed granted 

to the Association for the benefit of its 

members and the use restrictions on the 

Airspace Lot will apply to and may be enforced 

against all or any portions of the Airspace Lot 

and the owners thereof, as the Project Owner 

may elect from time to time. In any event, 

each owner of a portion of the Airspace Lot, 

whether condominiumized or not, is subject to 

all provisions of this Agreement. 

¶ 5 The RECA established that the Airspace Lot Owner would be 

responsible for a flat amenity access fee set by the Project Owner 

and 59.7% of the operating and capital improvement costs of the 

Arrabelle. As the owner of both the Airspace Lot and the Project 

Lot, Vail Resorts signed the RECA on behalf of both owners. 

¶ 6 Immediately after recording the RECA, Vail Resorts recorded a 

condominium plat creating sixty-six condominiums in the Airspace 

Lot and a condominium declaration creating the Arrabelle at Vail 

Square Residential Condominium Association, Inc. (Association). 

The condominiums ultimately sold with base prices ranging from 

$1,195,000 to $6,695,000. 
5 

¶ 7 Problems arose between Vail Resorts and the Association 

within the first year of operation. While the RECA required the 

Association to pay a $1,975,853 expense payment in 2008, the 

Association objected. And because the 2008 Arrabelle operations 

ran substantially over budget, the Association was facing yet a 

larger expense payment in 2009. On February 17, 2009, the 

Association notified Vail Resorts it was terminating the RECA. 

¶ 8 On June 1, 2009, the Association filed this action seeking a 

declaratory judgment allowing it to terminate the RECA or 

alternatively ruling that the RECA was in violation of CCIOA, 

requiring reformation. The Association made additional claims for 

statutory breach of good faith, breach of fiduciary duties, and 

breach of the common law duty of good faith and fair dealing. Vail 

Resorts counterclaimed for breach of contract and unjust 

enrichment. 

¶ 9 The case proceeded in three phases. First, the trial court 

granted the Association’s motion for partial summary judgment, 

ruling that the Arrabelle is not a CCIOA small planned community 

under section 38-33.3-116(2) because it was subject to development 
6 

rights. See § 38-33.3-116(2) (“If a . . . planned community created 

in this state on or after July 1, 1998, contains . . . no more than 

twenty units and is not subject to any development rights, it is 

subject only to sections 38-33.3-105 to 38-33.3-107[, C.R.S. 2015,] 

. . . .”). 

¶ 10 Second, the court conducted a trial addressing the method of 

reforming the RECA to comply with CCIOA (Phase I Trial). Under 

sections 38-33.3-112 and -203, C.R.S. 2015, the court struck the 

amenity access fee from the RECA and reformed the agreement to 

include, among other things, mandatory alternative dispute 

resolution. See § 38-33.3-124, C.R.S. 2015 (dispute resolution 

under CCIOA). The court also concluded that the RECA included 

an incorrect cost allocation ratio (allocating 59.7% to the residences 

in the Airspace Lot and 40.3% to the Project Lot) and readjusted the 

burden to 49.1% to the Airspace Lot residences. 

¶ 11 The court also ordered the parties to draft and ratify a master 

association declaration. § 38-33.3-220. Because the parties were 

unable to agree on a declaration after approximately one year, the 

court referred the matter to a special master who drafted a third 
7 

amendment to the RECA incorporating the court’s changes along 

with articles of incorporation and bylaws for a new master 

association. The court adopted the special master’s recommended 

instruments in July 2014. 

¶ 12 Third, the trial court held a trial on the remaining claims of 

breach of good faith, breach of contract, and unjust enrichment 

(Phase II Trial). Ultimately, the court denied all outstanding claims 

and awarded the Association, as the prevailing party, $2,500,000 in 

stipulated attorney fees.2

 

2 The trial court adopted the Association’s proposed findings for the 

Phase I Trial order and Vail Resorts’ proposed findings for the Phase 

II Trial order. This has caused conflict among the findings of the 

court and resulted in each party relying almost exclusively on its 

own findings on appeal. However, because the court noted on the 

first day of the Phase II Trial that “[t]o the extent I made a ruling, 

that’s binding. And while you might argue in your proposed 

findings that I made erroneous conclusions in my first order . . . [t]o 

the extent I made rulings . . . they’re done,” we look to the Phase I 

order as the definitive law of the case. Indeed, the Phase II order 

states: 

[T]his Court reaffirms its prior determination 

that [Vail Resorts’] development scheme has 

systemic flaws, which were further analyzed in 

the Phase I order. . . . Here in the Phase II 

Order, the Court denie[s] all the claims and 

counter-claims of both parties which effectively 
8 

¶ 13 Vail Resorts appeals the following trial court rulings: (1) the 

conclusion that the Arrabelle is not a “small planned community” 

under CCIOA section 38-33.3-116(2) because Vail Resorts reserved 

development rights under the RECA; (2) the reformed cost allocation 

based on the court’s conclusion that the RECA violated CCIOA 

section 38-33.3-207(2), C.R.S. 2015, because the original allocation 

discriminated “in favor of units owned by the declarant”; and (3) the 

adopted reformed RECA and master association documents 

because those documents contain terms not required by CCIOA. 

The Association conditionally cross-appeals the court’s conclusion 

that the Association did not validly terminate the RECA by 

e-mailing notice of termination to Vail Resorts under CCIOA section 

38-33.3-305, C.R.S. 2015. 

II. Standard of Review 

¶ 14 Statutory interpretation is a question of law that we review de 

novo. Triple Crown at Observatory Vill. Ass’n v. Vill. Homes of Colo., 

Inc., 2013 COA 150M, ¶ 10. Because a court’s primary duty is to 

 

leave[s] only that relief granted in the Phase I 

Order as the law of the entire case. 
9 

give full effect to the General Assembly’s intent, interpretation 

begins by examining the statute’s plain language within the context 

of the statute as a whole. Id. “Words and phrases should be given 

effect according to their plain and ordinary meaning . . . .” Farmers 

Grp., Inc. v. Williams, 805 P.2d 419, 422 (Colo. 1991). The court 

“must not strain to give language other than its plain meaning, 

unless the result is absurd.” Colo. Dep’t of Soc. Servs. v. Bd. of Cty. 

Comm’rs, 697 P.2d 1, 18 (Colo. 1985), superseded by statute on 

other grounds, Ch. 58, 1985 Colo. Sess. Laws 289-90. 

¶ 15 CCIOA is patterned after the Uniform Common Interest 

Ownership Act (UCIOA), and “we accept the intent of the drafters of 

a uniform act as the General Assembly’s intent when it adopts a 

uniform act.” Yacht Club II Homeowners Ass’n v. A.C. Excavating, 

94 P.3d 1177, 1180 (Colo. App. 2003), aff’d, 114 P.3d 862 (Colo. 

2005). 

III. CCIOA’s Small Planned Community Exception 

¶ 16 CCIOA provides in pertinent part that “[i]f a . . . planned 

community created in this state on or after July 1, 1998, contains 

. . . no more than twenty units and is not subject to any 
10 

development rights, it is subject only to sections 38-33.3-105 to 

38-33.3-107 . . . .” § 38-33.3-116(2). 

“Development rights” means any right or 

combination of rights reserved by a declarant 

in the declaration to: 

(a) Add real estate to a common interest 

community; 

(b) Create units, common elements, or limited 

common elements within a common interest 

community; 

(c) Subdivide units or convert units into 

common elements; or 

(d) Withdraw real estate from a common 

interest community. 

§ 38-33.3-103(14), C.R.S. 2015. “‘Common interest community’ 

means real estate described in a declaration with respect to which a 

person, by virtue of such person’s ownership of a unit, is obligated 

to pay for real estate taxes, insurance premiums, maintenance, or 

improvement of other real estate described in a declaration.” § 38-

33.3-103(8). A “‘[d]eclarant’ means any person or group of persons 

acting in concert who: . . . [r]eserves or succeeds to any special 

declarant right.” § 38-33.3-103(12)(b); see § 38-33.3-103(21) 

(“‘Person’ means . . . a corporation . . . .”). And “‘[s]pecial declarant 
11 

rights’ means rights reserved for the benefit of a declarant to . . . 

exercise any development right.” § 38-33.3-103(29). 

¶ 17 The provisions of CCIOA “may not be varied by agreement, and 

rights conferred by this article may not be waived. A declarant may 

not act under a power of attorney or use any other device to evade 

the limitations or prohibitions of this article or the declaration.” 

§ 38-33.3-104, C.R.S. 2015. 

A. Development Rights 

¶ 18 In granting the Association’s motion for partial summary 

judgment, the trial court concluded that section 19 of the RECA 

reserved the right to condominiumize the Airspace Lot and, 

therefore, reserved a development right in Vail Resorts as defined by 

section 38-33.3-103(14). By using plain language indicating the 

existence of a future right — “the Airspace Lot Owner may, at its 

election, subject the Airspace Lot to a condominium regime” — Vail 

Resorts reserved the right to create within the Airspace Lot a 

common interest community in which physical portions thereof 

would be designated for separate ownership. § 38-33.3-103(8) 

(defining common interest community); § 38-33.3-103(9) (defining 
12 

condominium). These separately owned physical portions of the 

Airspace Lot would be units. § 38-33.3-103(30) (“‘Unit’ means a 

physical portion of the common interest community which is 

designed for separate ownership . . . .”). Therefore, the plain 

language of the RECA allowed Vail Resort to “[c]reate units . . . 

within a common interest community.” § 38-33.3-103(14). 

Consequently, the court concluded the RECA subjected the 

Airspace Lot to “development rights” precluding the Arrabelle from 

becoming a small planned community. 

¶ 19 Vail Resorts argues that the Arrabelle is a small planned 

community because (1) UCIOA section 4-103(b) (Unif. Law Comm’n 

1982) establishes that CCIOA does not consider the ability to create 

nested common interest communities as development rights; (2) the 

UCIOA requires that a development right alter the legal structure of 

an existing common interest community and the 

condominiumization of the Airspace Lot did not alter the Arrabelle’s 

legal structure; and (3) the RECA did not reserve any development 

rights in the “declarant” but rather in the “Airspace Lot Owner,” 
13 

who coincidentally happened to be the declarant in these 

circumstances. 

¶ 20 Vail Resorts relies upon UCIOA section 4-103(b) (a section that 

was not adopted in CCIOA) to support an argument that although a 

declarant may reserve a power to place one common interest 

community inside another, such a power is not a development 

right. That section provides: 

If a common interest community composed of 

not more than 12 units is not subject to any 

development rights and no power is reserved to 

a declarant to make the common interest 

community part of a larger common interest 

community, group of common interest 

communities, or other real estate, a public 

offering statement may but need not include 

the information otherwise required by 

paragraphs (9), (10), (15), (16), (17), (18), and 

(19) of subsection (a) and the narrative 

descriptions of documents required by 

subsection (a)(4). 

UCIOA § 4-103(b) (Unif. Law Comm’n 1982). 

¶ 21 We reject this argument for three reasons. First, UCIOA 

section 4-103(b) deals not with development rights but with 

disclosure requirements and exempts a declarant from making 

certain disclosures where the common interest community is small 
14 

and the declarant has no power to attach it to another community 

that would result in a common interest community of more than 

twelve units. It does not alter CCIOA’s definition of development 

rights. 

¶ 22 Second, it is apparent here that Vail Resorts did in fact have 

the power to expand the size of the Arrabelle. It created a common 

interest community in the Airspace Lot and, in doing so, quite 

obviously exercised a power reserved in the RECA. That it now 

chooses to describe that power as something other than a 

development right is a distinction without a difference. 

¶ 23 Third, the creation of sixty-six condominiums would not allow 

a declarant to qualify for an exemption under the small planned 

community provision of UCIOA section 4-103(b) in any case. We 

can find no provision in either CCIOA or UCIOA for the creation of 

an “air lot” above an existing real estate footprint that can contain a 

large number of condominiums amalgamated as a single “unit” that 

would qualify as a small planned community. In our view this 

violates the letter and the spirit of CCIOA’s definition of 
15 

development rights and, consequently, we discern no error in the 

trial court’s conclusion to that effect. 

¶ 24 The reservation of the right to establish a second common 

interest community within the boundaries of an existing common 

interest community is far more akin to the ability to create units 

under section 38-33.3-103(14)(b) than the unadopted exclusion 

contained in UCIOA section 4-103(b). 

¶ 25 Vail Resorts also contends that under CCIOA a development 

right must alter the legal structure of the existing common interest 

community. Because RECA section 19 only allows for the creation 

of a new common interest community within the existing legal 

structure of the Arrabelle, Vail Resorts argues section 19 did not 

reserve a development right. We disagree. 

¶ 26 UCIOA section 2-105 comment 1 (Unif. Law Comm’n 1982) 

states in pertinent part: 

This Act makes a functional distinction 

between the declaration and the public offering 

statement. It only requires the declaration to 

contain those matters which affect the legal 

structure or title of the common interest 

community. This includes the reserved powers 

of the declarant to exercise development rights 

within the common interest community. A 
16 

narrative description of those rights, however, 

and the possible consequences flowing from 

their exercise, are required to be disclosed only 

in the public offering statement and not in the 

declaration. 

(Emphasis added.) 

¶ 27 Relying on this comment, Vail Resorts argues RECA section 19 

does not allow the new condominium community in the Airspace 

Lot to affect the legal structure of the Arrabelle. But Vail Resorts 

completely glosses over the next two words — “or title” — in the 

comment. When Vail Resorts subjected the Airspace Lot to 

condominiumization, it sold units to individuals who then gained 

title to that property. Even ignoring the individual condominiums, 

the common interest community within a common interest 

community development still resulted in the Association becoming 

the owner of the Airspace Lot, thereby affecting the title of the 

Arrabelle. 

¶ 28 Moreover, UCIOA section 2-105 addresses those matters that 

must be contained in a declaration; it is not a clear definition of 

development rights. Instead, UCIOA section 1-103 comment 13 

(Unif. Law Comm’n 1982) expressly defines development rights: 
17 

“Development rights,” includes a panoply of 

sophisticated development techniques that 

have evolved over time throughout the United 

States and which have been expressly 

recognized and regulated in the case of 

condominiums, in an increasing number of 

jurisdictions, beginning with Virginia in 1974. 

The concept of “development rights” lies at the 

heart of one of the principal goals of the Act, 

which is to maximize the flexibility available to 

a developer seeking to adjust the size and mix 

of a project to the demands of the marketplace, 

both before and after creation. The principal 

constraint on that flexibility is the obligation of 

disclosure, and its impact on marketing. Thus 

“development rights” include the rights to: 

(a) increase the size or density of a project, 

either by adding real property to it, or by 

creating new units, common elements or 

limited common elements on either the original 

land or within the original buildings, or on any 

other land or buildings subsequently added; 

(b) change the mix of units, common elements 

and limited common elements, either by 

subdividing units, or by converting units into 

common elements or limited common 

elements; and 

(c) reduce the size of a project by withdrawing 

real property — whether land, entire buildings, 

or particular units — from it. 

As a matter of simple logic, there are few other 

things that could be done to a real property 

regime which are not include [sic] within the 

concept of development rights. This great 
18 

flexibility, particularly when coupled with the 

broad definitions of “unit” and “real estate”, 

the power to create leasehold projects, and the 

right to subordinate unit mortgages to blanket 

mortgage on either the units or common 

elements, is an important element in the Act. 

. . . . 

The right “to create units, common elements, 

or limited common elements” has frequently 

been useful in the case of commercial or mixed 

use common interest communities, where the 

declarant needs to retain a high degree of 

flexibility to meet the space requirements of 

prospective purchasers who may not approach 

him until the common interest community has 

already been created. For example, an entire 

floor of a high-rise building may be intended 

for commercial buyers, but the declarant may 

not know in advance whether one purchaser 

will want to buy the whole floor as a single 

unit or whether several purchasers will want 

the floor divided into service [sic] units, 

separated by common element walls and 

served by a limited common element corridor. 

This development right is sometimes useful 

even in purely residential common interest 

communities, especially those designed to 

appeal to affluent buyers. Similarly, the 

development rights “to subdivide units or 

convert units into common elements” is most 

often of value in commercial common interest 

communities, but may be useful in certain 

kinds of residential common interest 

communities as well. 
19 

¶ 29 Section 19 of the RECA allows Vail Resorts to “increase the . . . 

density of [the] project . . . by creating new units . . . on . . . the 

original land.” UCIOA § 1-103 cmt. 13 (Unif. Law Comm’n 1982). 

Thus, the condominiumization of the Airspace Lot was a 

development right. 

¶ 30 Vail Resorts next argues the RECA reserved the 

condominiumization of the Airspace Lot to the “Airspace Lot 

Owner,” not the “declarant,” and, therefore, it is not a development 

right. The creativeness of this argument does not further Vail 

Resorts’ position. Ultimately, when the RECA was drafted, Vail 

Resorts was both the declarant and the Airspace Lot Owner. 

Section 38-33.3-103(31) states in pertinent part that a “‘[u]nit 

owner’ means the declarant or other person who owns a unit . . . . 

In a . . . planned community, the declarant is the owner of any unit 

created by the declaration until that unit is conveyed to another 

person.” 

¶ 31 The RECA was created by Vail Resorts, which owned both the 

Airspace Lot and the Project Lot, and was signed on behalf of “both 

owners” by the same individual. To split hairs so finely as Vail 
20 

Resorts would have us do would lead to an absurd result where a 

declarant, simply by titling itself as “Unit Owner,” could circumvent 

the clear intent of section 38-33.3-116(2) to exclude planned 

communities with development rights from the small planned 

community exception to CCIOA. See UCIOA § 1-103 cmt. 24 (Unif. 

Law Comm’n 1982) (“The definition makes it clear that a declarant, 

so long as he owns units in a common interest community, is the 

unit owner of any unit created by the declarations, and is therefore 

subject to all of the obligations imposed on other unit owners, 

including the obligation to pay common expense assessments.”). 

¶ 32 RECA section 19 provides “that the Airspace Lot Owner may, 

at its election, subject the Airspace Lot to a condominium regime 

under CCIOA.” When executed, the Airspace Lot Owner was the 

declarant creating the declaration reserving the right to 

condominiumize. Therefore, the declarant was reserving the right 

to create units in the common interest community and that 

community was subject to development rights. § 38-33.3-116(2); 

see § 38-33.3-103(14)(b), (29). Accordingly, the Arrabelle is not a 

small planned community. 
21 

B. Number of Units 

¶ 33 The Association alternatively argues on appeal that we may 

affirm the decision of the trial court because the Arrabelle contains 

more than twenty units. § 38-33.3-116(2) (a small planned 

community contains no more than twenty units); see Taylor v. 

Taylor, 2016 COA 100, ¶ 31 (“An appellate court may . . . affirm on 

any ground supported by the record.”). The Association and Vail 

Resorts disagree about how to quantify the number of units in the 

Arrabelle. 

¶ 34 Vail Resorts argues that RECA section 18 establishes only two 

lots for purposes of section 38-33.3-116(2): “The planned 

community created by this Agreement contains only two lots, the 

Project Lot and the Airspace Lot, and is therefore exempt from 

CCIOA’s provisions pursuant to the exemption contained in section 

38-33.3-116(2) of CCIOA for planned communities containing no 

more than 20 lots.” Therefore, Vail Resorts argues that when it 

created the condominium units under the separately filed 

condominium declaration, it did not alter the two unit structure of 

the Arrabelle. 
22 

¶ 35 On the other hand, the Association argues that CCIOA does 

not provide for the separate consideration of units within a single 

planned community based on separate declarations filed by the 

declarant. See § 38-33.3-103(13) (“‘Declaration’ means any 

recorded instruments however denominated, that create a common 

interest community, including any amendments to those 

instruments and also including, but not limited to, plats and 

maps.”); Lynn S. Jordan et al., The Colorado Common Interest 

Ownership Act, 21 Colo. Law. 645, 650 (Apr. 1992) (“Under CCIOA, 

a declaration includes not only the recorded document entitled 

‘declaration,’ setting forth covenants, conditions and restrictions, 

but also all recorded maps, plats and plans or any combination 

thereof.”). Instead, the Association suggests that all separately 

owned physical portions within a planned community should be 

counted together for purposes of the small planned community 

exception. See § 38-33.3-103(30) (defining unit). 

¶ 36 We agree with the Association. Reading CCIOA as a whole it is 

apparent that the General Assembly intended a “clear, 

comprehensive, and uniform framework for the creation and 
23 

operation of common interest communities.” § 38-33.3-102(1)(a), 

C.R.S. 2015 (CCIOA legislative declaration). The small planned 

community exception, section 38-33.3-116, is meant to remove 

communities with fewer than twenty units and no development 

rights from this “clear, comprehensive, and uniform framework.” It 

is the exception, not the rule. 

¶ 37 The General Assembly intended for most common interest 

communities to be bound by CCIOA and for developers to have 

“flexible development rights with specific obligations within a 

uniform structure of development of a common interest 

community.” § 38-33.3-102(1)(c) (emphasis added). Allowing Vail 

Resorts to use multiple levels of declarations to avoid those specific 

obligations through a hyper-technical interpretation of CCIOA 

violates the purpose and the spirit of the statute. Furthermore, a 

developer “may not . . . use any . . . device to evade the limitations 

or prohibitions of this article” and the “rights conferred by this 

article may not be waived.” § 38-33.3-104. Were we to accept Vail 

Resorts’ interpretation of CCIOA, we would be supporting a legal 
24 

fiction intended to evade the limitations and prohibitions of CCIOA.3 

The General Assembly has expressly disavowed this approach. 

¶ 38 The Arrabelle contains a hotel, retail shops, restaurants, 

parking, a spa, an ice-skating rink, and sixty-six condominiums. 

This, by common definition, is not a “small planned community.” 

And by statutory definition, we conclude the Arrabelle contains 

sixty-seven units (the Project Lot owned by Vail Resorts and sixtysix condominiums whose physical portion of the common interest 

community is designed for separate ownership). We perceive no 

language in CCIOA to support Vail Resorts’ argument that the fact 

that these units were created by two declarations should preclude 

their consideration for the total number of units within a single 

planned community. 

¶ 39 Nor are we concerned that this conclusion requires reversing 

the trial court as suggested by Vail Resorts. After the Phase I Trial, 

 

3 Counsel responsible for drafting the RECA gave a presentation at 

the American Bar Association’s Joint Fall Session on September 28, 

2007, where she acknowledged that the RECA was intended to 

prevent residents from having “any say, period.” When testifying at 

the Phase I Trial, counsel also acknowledged that the RECA used a 

square footage allocation model “to keep the residential owners out 

of the process.” 
25 

the court was forced to appoint a special master to complete the 

reformation of the RECA and creation of a master association. The 

instruments adopted by the court include statements that “[t]here is 

hereby created a planned community . . . consisting of the Project 

Lot and the Airspace Lot” and “[e]ach Lot is a ‘unit’ as defined by 

the Act.” There is nothing in CCIOA to suggest that the current 

structure of the Arrabelle as a Project Lot and Airspace Lot with 

sixty-six separate condominium units within the Airspace Lot is 

inappropriate. See § 38-33.3-103(22) (“A condominium or 

cooperative may be part of a planned community.”). Rather, the 

error would be in allowing that structure to skirt the requirements 

of CCIOA by hiding behind a fictional two-unit scheme. Developers 

are free to exercise their “flexible development rights” so long as 

they respect the “specific obligations” of CCIOA. 

§ 38-33.3-102(1)(c). Hence, a developer may create a common 

interest community that has multiple declarations creating planned 

communities and condominium communities,4 but a court may 

 

4 For example, Highlands Ranch, Colorado, a town of 96,000 

people, is a common interest community covered by CCIOA. 

Highlands Ranch Metro District, https://perma.cc/VU94-8N8Y; 
26 

consider all the units within that common interest community in 

determining whether the small planned community exception to 

CCIOA applies. See § 38-33.3-103(8) (common interest 

community); § 38-33.3-103(9) (condominium); § 38-33.3-103(22) 

(planned community); § 38-33.3-103(30) (unit); § 38-33.3-116 

(small planned community exception). 

¶ 40 In short, because the Arrabelle contains a total of sixty-seven 

units, it is not a small planned community containing fewer than 

twenty units under section 38-33.3-116(2). 

IV. Reformation of the RECA 

¶ 41 After determining that the Arrabelle was not a small planned 

community, the court conducted the Phase I Trial to determine how 

to reform the RECA to comply with CCIOA. 

¶ 42 Part of the trial focused on whether the cost allocation 

provision of the RECA violated CCIOA section 38-33.3-207(2), which 

requires that cost “allocations may not discriminate in favor of units 

owned by the declarant or an affiliate of the declarant.” Ultimately, 

the court concluded that while the square footage mechanism to 

 

Highlands Ranch Community Association, Governing Documents, 

https://perma.cc/4HAG-RQUT. 
27 

determine cost allocation listed in the RECA was appropriate, the 

original cost allocation of 59.7% to the Association was based upon 

“square footage calculations pulled from various maps and tables 

prepared long before the Arrabelle was constructed,” which 

discriminated in favor of Vail Resorts. Therefore, the court accepted 

the calculations of the Association’s expert who used as-built 

drawings to calculate square footage, resulting in a 49.1% 

allocation to the Association. 

¶ 43 The remainder of the Phase I Trial focused on how to reform 

the balance of the RECA. The court ordered the parties to create a 

master association, § 38-33.3-220, strike the amenity access fee in 

the cost allocation provision, § 38-33.3-207, adjust utility costs, 

§ 38-33.3-315, C.R.S. 2015, and consent to binding arbitration, 

§ 38-33.3-124. 

A. Cost Allocation 

¶ 44 Section 6(b) of the RECA states: 

Each calendar year, the Airspace Lot Owner 

will pay to the Project Owner a portion, 

calculated as provided for below (the “Expense 

Payment”), of the operating, maintenance, 

utility, employee and other expenses related to 

the ongoing ownership, operation and 
28 

maintenance of the Project Improvements, 

including, without limitation, the Amenities, 

and related off-site improvements and facilities 

to the extent the responsibility of the Project 

Owner (the “Operating Costs”). The Operating 

Costs in no event will include any costs solely 

attributable to an income-generating portion of 

the Project Improvements for which the 

Airspace Lot Owner has access to or use of by 

virtue of being a member of the public, and not 

due to the Airspace Lot Owner’s rights under 

this Agreement, such as, by way of example 

only, any restaurant or retail shop within the 

Project Improvements, all as determined by the 

Project Owner in its ordinary business 

judgment. The Parties acknowledge and agree 

that the Expense Payment is also intended to 

compensate the Project Owner for, among 

other things, the cost of all utility services 

provided to the Airspace Lot as part of the 

utility service provided to the Project 

Improvements, but not separately metered, 

and the cost of valet service. Each year’s 

Expense Payment will be comprised of two 

components: (a) a flat fee intended to cover the 

Airspace Lot Owner’s share of all Operating 

Costs related to the Amenities (the “Amenity 

Access Fee”); and (b) 59.7% of the “Estimated 

Annual Operating Costs” (as defined below), 

which percentage the parties acknowledge and 

agree is based on the approximate square 

footage of the Airspace Improvements[5] divided 

by the sum of the approximate square footage 

of the Airspace Improvements and the Project 

 

5 “Airspace Improvements” are defined in the RECA as “a 

combination of residential dwellings and individual sleeping rooms 

attached to some of the residential dwellings.” 
29 

Improvements, excluding the square footage of 

the parking garage and loading and delivery 

facility within the Project Improvements and is 

not subject to adjustment based on 

remeasurement or otherwise. The Amenity 

Access Fee is initially established at $167,500 

per year, but may be increased from time to 

time by the Project Owner in its ordinary 

business judgment based upon circumstances 

then prevailing. The Parties acknowledge and 

agree that the Amenity Access Fee is a flat fee 

in lieu of calculating the Airspace Lot Owner’s 

share of those portions of the Operating Costs 

related to operating the Amenities, and the 

Estimated Annual Operating Costs do not 

include any costs related to operating the 

Amenities, as determined by the Project Owner 

in its ordinary business judgment. The Parties 

acknowledge and agree that there is no 

operational history upon which to base the 

first year’s Expense Payment and, based upon 

estimated costs, the parties have determined 

that from the date of this Agreement through 

December 31, 2008, the Airspace Lot Owner’s 

annual Expense Payment will be $1,975,853, 

prorated based upon a 365-day year. Each 

calendar year thereafter, prior to the start of 

the calendar year, the Project Owner will 

develop a budget estimating the total amount 

of the year’s Operating Costs (excluding 

Operating Costs for the Amenities) anticipated 

to be incurred by the Project Owner in that 

calendar year (the “Estimated Annual 

Operating Costs”). At any time, the Project 

Owner may cease charging the Amenity Access 

Fee and, upon such event, may include all 

Operating Costs related to the Amenities in the 

Estimated Annual Operating Costs and the 
30 

Airspace Lot Owner will pay its percentage 

share of such costs as part of the Expense 

Payment. The Airspace Lot Owner will pay 

each Expense Payment without demand or setoff, in equal installments due on the first day 

of each calendar quarter in such calendar 

year. Any failure or delay of the Project Owner 

in establishing or updating the amount of the 

Expense Payment for any calendar year will 

not be deemed a waiver, modification, or 

release of the right to so establish or update 

those installments, or of the obligation of the 

Airspace Lot Owner to pay installments of an 

Expense Payment prospectively. 

¶ 45 The court made several interrelated conclusions affecting the 

expense payment due by the Association. First, the court 

concluded that “the [Vail Resorts]-owned facilities in which 

residential owners are granted an easement function as 

CCIOA-defined common elements.” Second, the “59.7% 

square-footage ratio was calculated without any reference to the 

RECA” or the formula set forth in section 6(b). Third, 

the data relied upon by [a Vail Resorts 

employee to establish the 59.7%] does not take 

into account over 70,000 square feet of 

building space . . . [and] contrary to the RECA 

formula, [Vail Resorts] excluded from this ratio 

several other areas of the Project 

Improvements such as the plaza and skating 

rink. By removing the square footage for these 

substantial areas of the Project Improvements 
31 

from the total (all of which are owned by [Vail 

Resorts]), [Vail Resorts] inflated the rate by 

which costs are allocated to the Association. 

¶ 46 And fourth, “the [Vail Resorts’-]derived 59.7% is not supported 

by the evidence as being a fair representation of how the Project 

Space and the Airspace is allocated between the parties and . . . 

such analysis by [Vail Resorts] discriminates in favor of [Vail 

Resorts] at the expense of the Association.” 

¶ 47 Under CCIOA, “[t]he declaration must state the formulas used 

to establish allocations of interest. Those allocations may not 

discriminate in favor of units owned by the declarant or an affiliate 

of the declarant.” § 38-33.3-207(2). 

¶ 48 Vail Resorts contends the court erred in its interpretation 

because the RECA favors the Project Owner, not the declarant, in 

allocating 59.7% of costs to the Association. This is a similar 

argument to the one Vail Resorts made regarding the Airspace Lot 

Owner reserving the right to develop rather than the declarant. The 

fact remains that Vail Resorts is both the declarant and the Project 

Owner. Thus, when the Project Owner (Vail Resorts) discriminated 

in favor of itself by shifting approximately 60% of its costs to the 
32 

Association while in actuality owning approximately 50.9% of the 

Arrabelle, the declarant (Vail Resorts) was also doing so. 

¶ 49 Vail Resorts relies on the amended UCIOA section 2-107 

comment 10 (Unif. Law Comm’n 2008), which interprets the 1982 

UCIOA, to support its position that the RECA does not discriminate 

in its favor: 

Questions have arisen concerning the drafters’ 

intent regarding the language in subsection 

(b), which prohibits the declaration in 

allocating votes and common expense 

liabilities among the units, from 

“discriminating in favor of units owned by the 

declarant.” Specifically, the question is 

whether this section imposes a special level of 

scrutiny on the allocation of votes and 

common expense liability to units that the 

declarant may own, compared to similar units 

that are owned by persons who are not 

declarants. 

The answer is that the language means what it 

says: that is, if the allocated interests would 

change at the time the declarant sold the unit, 

then the allocated interests are improper 

because they discriminate in favor of the 

declarant’s ownership of that unit. However, if 

the allocation of common expenses and votes 

is permanent rather than dependent on the 

owner’s identity and one whose formula is 

identified in the declaration, then the 

allocation is proper. Subject to the obligations 

of good faith in Section 1-113 and the 
33 

prohibition on unconscionable terms in 

Section 1-112, this would be true even if the 

effect of the allocation were to create a relative 

benefit in favor of units that the declarant or 

its affiliates intend to own for an indefinite 

period. 

¶ 50 To be sure, this comment suggests that as long as the Project 

Owner always benefits from the unfair allocation of costs between 

itself and the Airspace Lot Owner, the allocation is “proper.” 

However, the court not only determined that the cost allocation 

discriminated in favor of Vail Resorts because Vail Resorts excluded 

significant portions of the Project Lot from the cost allocation 

formula but also because the “59.7% square-footage ratio was 

calculated without any reference to the RECA” or the formula set 

forth in section 6(b). Consequently, the allocation of 59.7% in 

RECA section 6(b) violates the first sentence of section 

38-33.3-207(2) because the allocation did not match “the formulas 

used to establish allocations of interests.” 

¶ 51 Moreover, the example in comment 10 goes on to describe a 

scenario which highlights how the RECA discriminates in favor of 

Vail Resorts. 
34 

A common interest community consists of a 

high-rise building containing 10 floors of equal 

size. There are 4 units on each floor except 

the top floor, where there is one 1 ‘penthouse’ 

unit. Even though the penthouse unit is four 

times the size of the units on the 9 other 

floors, and is clearly more valuable than the 

other 36 units, the declaration allocates an 

equal share of the common expenses to all the 

units, including the penthouse unit. The effect 

of this allocation is that the penthouse unit 

bears a 1/37th share of the common expenses 

— this is only 25% of the cost on a per square 

foot basis — of the share borne by each unit 

owner on a lower floor. 

Assume that the declaration properly contains 

the formula used for the allocation of common 

expenses among the units and properly 

discloses the material and unusual 

circumstances that the penthouse benefits 

substantially from the formula used to allocate 

expenses. 

The fact that the declarant intends to retain 

ownership of the penthouse unit and live in 

that unit for an indefinite period does not 

mean that the standard contained in section 

2-107(b) has been violated. However, the Act 

would be violated if the declaration provided 

that, upon the declarant’s sale of the 

penthouse, the formula for allocating common 

expenses would be changed to an allocation 

among all the units based on their relative 

sizes. 

In the example, this appears to yield an unjust 

result and a court might be invited to consider 

the extent to which the declarant had acted in 
35 

bad faith or unconscionably in making such an 

allocation. Nevertheless, any other rule would 

simply encourage challenges to any allocation 

of common expenses, since an argument can 

always be made that any allocation — whether 

done on relative size, number of rooms, 

“value”, location within a building, equality or 

any other basis — inevitably works to the 

relative disadvantage of some owners 

compared to others in the same community. 

UCIOA § 2-107 cmt. 10 (Unif. Law Comm’n 2008) (emphasis added). 

¶ 52 Here, the RECA’s 59.7% allocation did not match “the formula 

used for the allocation of common expenses among the units” and 

did not “properly disclose[] the material and unusual 

circumstances” that Vail Resorts “benefit[ed] substantially from the 

formula used to allocate expenses.” This lack of transparency 

supports the court’s conclusion that section 6(b) was 

“unconscionable under CCIOA § 112”6 and discriminated in favor of 

units owned by Vail Resorts. 

 

6 Vail Resorts argues the trial court repudiated this finding in its 

Phase II Trial order. However, as we noted in footnote 2, the court 

did not revisit its earlier conclusions in the Phase II Trial. Instead, 

the Phase II Trial focused on the remaining claims and involved 

different evidence than the Phase I Trial. Accordingly, the trial 

court’s conclusion in the Phase I Trial order that RECA section 6(b) 

was unconscionable under section 38-33.3-112, C.R.S. 2015, is 

appropriate and valid. 
36 

¶ 53 Because the 59.7% cost allocation to the Association did not 

correspond to the formula established in RECA section 6(b), and 

because that allocation discriminated in favor of Vail Resorts’ 

Project Lot without properly disclosing that the allocation 

substantially benefitted that lot, we discern no error in the trial 

court’s conclusion to reform RECA section 6(b) pursuant to the 

Association’s expert’s recommendation based on as-built drawings 

of the Arrabelle. 

B. Additional Reformations 

¶ 54 The court ordered additional reformations to the RECA and 

the creation of a master association under section 38-33.3-220. 

Vail Resorts argues these actions exceeded the authority of the 

court. We disagree. 

¶ 55 “The principles of law and equity . . . supplement the 

provisions of this article . . . .” § 38-33.3-108, C.R.S. 2015. 

The court, upon finding as a matter of law that 

a contract or contract clause relating to a 

common interest community was 

unconscionable at the time the contract was 

made, may refuse to enforce the contract, 

enforce the remainder of the contract without 

the unconscionable clause, or limit the 
37 

application of any unconscionable clause in 

order to avoid an unconscionable result. 

§ 38-33.3-112(1). “The remedies provided by this article shall be 

liberally administered to the end that the aggrieved party is put in 

as good a position as if the other party had fully performed.” 

§ 38-33.3-114(1), C.R.S. 2015. 

¶ 56 “Reformation is an equitable remedy within the trial court’s 

discretion.” Davis v. GuideOne Mut. Ins. Co., 2012 COA 70M, ¶ 57; 

see CIGNA Corp. v. Amara, 563 U.S. 421, 440 (2011) (“The power to 

reform contracts (as contrasted with the power to enforce contracts 

as written) is a traditional power of an equity court, not a court of 

law, and was used to prevent fraud.”); Restatement (Third) of 

Property: Servitudes § 6.3 cmt. a (Am. Law Inst. 2000) (“The judicial 

power to authorize creation of an association is that of a court of 

equity with its attendant flexibility and discretion to fashion 

remedies to correct mistakes and oversights and to protect the 

public interest.”). A trial court abuses its discretion when its 

decision is manifestly arbitrary, unreasonable, or unfair, or when it 

misapplies the law. Landmark Towers Ass’n v. UMB Bank, N.A., 

2016 COA 61, ¶ 31. 
38 

¶ 57 At the conclusion of the Phase I Trial, the court ordered that 

“[i]f the parties are unable to draft or ratify a declaration without 

the Court’s assistance, this matter will be referred to a special 

master of the Court’s choosing, who will draft a declaration that 

shall, subject to the Court’s approval, be adopted as an Order of the 

Court.” The court similarly noted that “[i]f the parties cannot agree 

on how to allocate . . . utility costs without the Court’s assistance, 

the matter will be referred to a special master of the Court’s 

selection,” and “[i]f the parties cannot agree on how to allocate . . . 

recalculated costs without the Court’s direction . . . the matter will 

be referred to a special master of the Court’s selection.” Because 

the parties could not agree after a year, the court appointed a 

special master (recommended by Vail Resorts) who drafted the 

master association declaration and reforms to the RECA. 

¶ 58 Vail Resorts specifically challenges the court’s reformations on 

parking, lobby expenses, utility costs, and mandatory arbitration. 

Parking, lobby, and utility costs all stem from RECA section 6(b), 

which the court concluded violated CCIOA section 38-33.3-207(2) 

and was unconscionable under section 38-33.3-112. These 
39 

conclusions supported reformation of the RECA. The court then 

attempted the fairest approach to reformation by looking at the 

requirements of CCIOA for guidance. See § 38-33.3-124 (alternative 

dispute resolution); § 38-33.3-315 (utilities). Indeed, the court 

simply placed Vail Resorts and the Association in the position they 

would have been had Vail Resorts initially created a 

CCIOA-compliant common interest community. While the ultimate 

reforms may have been based on permissive, rather than 

mandatory, terms recommended by CCIOA, we perceive no error in 

the court adopting those terms. 

¶ 59 We also reject Vail Resorts’ argument of overreaching insofar 

as it relies on Hauer v. McMullin, 2015 COA 90 (cert. granted Mar. 

21, 2016). In Hauer, the question was whether several recorded 

documents could satisfy CCIOA’s requirement that common interest 

communities be formed by an assessment obligation described in a 

declaration. ¶ 27. The division, without citation to authority, 

stated that “[w]e reiterate the trial court’s conclusion that courts do 

not have the power to create an agreement for the members of a 
40 

homeowners association, or to create an association’s operational 

infrastructure.” ¶ 30. 

¶ 60 First, CCIOA section 38-33.3-108 allows a court to use 

principles of law and equity to supplement CCIOA; this includes the 

court’s ability to create an association under certain circumstances. 

Indeed, the division in Hauer quoted the Restatement (Third) of 

Property: Servitudes section 6.2 comment c (Am. Law Inst. 2000), 

that “an association may be created . . . by a court under certain 

circumstances.” ¶ 20. 

¶ 61 Second, the trial court in Hauer added a provision to the 

documents creating an implied common interest community; the 

court created the fractional interest of the common expenses for 

which each lot owner was responsible. ¶ 24. 

¶ 62 Third, the quoted statement is not integral to Hauer’s 

conclusion and is, therefore, dicta. See Hardesty v. Pino, 222 P.3d 

336, 340 (Colo. App. 2009) (“[D]ictum does not become law of the 

case.”) (citation omitted). 

¶ 63 And while Vail Resorts argues the trial court substituted its 

judgment for the judgment of the parties, we note the only party to 
41 

the original RECA was Vail Resorts itself. While the Association 

became the Airspace Lot Owner, there was never any initial 

agreement between Vail Resorts and the Association that the court 

disregarded. Moreover, the Association and Vail Resorts, having 

been afforded one year to resolves this matter, were unable to agree 

on reformations to the RECA. The litigation in this case had been 

ongoing for four years and the court had yet another phase of trial 

to conduct. See People v. Sandoval-Candelaria, 2014 CO 21, ¶ 26 

(“[O]ur cases make clear that trial courts have broad discretion to 

manage their dockets.”). We conclude that principles of equity 

support the trial court’s conclusion that these reformations were 

necessary for the RECA to comply with CCIOA, and we discern no 

abuse of discretion on the part of the trial court in appointing a 

special master and adopting his reformations. 

V. Conditional Cross-Appeal and Attorney Fees 

¶ 64 Because we do not set aside any of the court’s reformations, 

we do not address the Association’s conditional cross-appeal 

seeking a determination that the Association validly terminated the 

RECA by e-mail notice to Vail Resorts in February 2009. 
42 

¶ 65 Pursuant to C.A.R. 39.1 and RECA section 21, we award the 

Association the stipulated $300,000 in attorney fees for this appeal. 

VI. Conclusion 

¶ 66 The judgment is affirmed. 

JUDGE BOORAS and JUDGE MÁRQUEZ concur.