Title: River Place North Housing Corp. v. American Landma
Citation: N/A
Docket Number: 941963
State: Virginia
Issuer: Virginia Supreme Court
Date: September 15, 1995

Present:  Carrico, C.J., Compton, Stephenson, Whiting,
* Lacy, 
Hassell and Keenan, JJ. 
 
RIVER PLACE NORTH HOUSING  
CORPORATION 
 
OPINION BY JUSTICE A. CHRISTIAN COMPTON 
v.  Record No. 941963                September 15, 1995 
 
AMERICAN LANDMARK EQUITY CORP. 
 
 
 
FROM THE CIRCUIT COURT OF ARLINGTON COUNTY 
 
William T. Newman, Jr., Judge 
 
 
In this case, we are dealing with a cooperative, a multi-
dwelling complex.  Under the Virginia Real Estate Cooperative 
Act, Code §§ 55-424 through -506, a "cooperative" is "real estate 
owned by an association, each of the members of which is 
entitled, by virtue of his ownership interest in the association, 
to exclusive possession of a unit."  Code § 55-426.  A 
"cooperative interest" is "an ownership interest in the 
association coupled with a possessory interest in a unit under a 
proprietary lease."  Id.  A "proprietary lease" is "an agreement 
with the association pursuant to which a proprietary lessee has a 
possessory interest in a unit."  Id. 
 
The sole question in this appeal is whether the trial court 
correctly ruled that a cooperative housing association was not 
permitted to obtain a personal money judgment against a purchaser 
at foreclosure for assessments of cooperative fees unpaid by the 
owners of proprietary leases, which were the subject of the 
foreclosure. 
                     
     
*Justice Whiting participated in the hearing and decision of 
this case prior to the effective date of his retirement on 
August 12, 1995. 
 
 
 
 
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The facts are undisputed.  Appellant River Place North 
Housing Corporation, the plaintiff below, is the cooperative 
association for the River Place North housing cooperative, 
situated in Arlington County.  Abbas Ghassemi and Shawna L. 
Butler were the proprietary lessees of two River Place North 
cooperative units. 
 
In 1991, Ghassemi and Butler were delinquent in their 
mortgage and cooperative fee payments.  The cooperative fees 
arose from assessments made upon the proprietary lessees to pay, 
inter alia, expenses of the common elements of the cooperative.  
See Code § 55-471.  The mortgage lender, Monument Associates, 
foreclosed its first deeds of trust on the units.  Appellee 
American Landmark Equity Corporation, the defendant below, 
purchased the properties at foreclosure for $120,000 each in 
April 1991, and received trustee's deeds of assignment of 
proprietary leases.  Each "Memorandum of Sale" described the 
"property" as the proprietary lease to the unit together with the 
lessee's shares of the capital stock of the plaintiff 
corporation. 
 
In May 1993, the plaintiff filed the present action against 
the defendant seeking a judgment to recover assessments on the 
two units in the sums of $6,289 and $5,963.03 respectively, which 
represented the delinquencies at the time defendant became the 
proprietary lessee of the units.  After completion of the 
plaintiff's evidence during a bench trial, the trial court 
 
 
 
 
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granted the defendant's motion to strike the plaintiff's 
evidence, ruling "that there is no personal liability of the 
Defendant for the debt claimed by the Plaintiff."  The court did 
not address a statute of frauds defense raised by defendant.  We 
awarded the plaintiff an appeal from the trial court's August 
1994 order entering judgment for the defendant. 
 
On appeal, plaintiff contends the trial court erred in 
ruling that it could not obtain a personal money judgment against 
the defendant for the former proprietary lessees' unpaid 
assessments.  The plaintiff says the "foundation" of its motion 
for judgment is Section 7.3 of its bylaws.  The section provides 
that the "new Proprietary Lessee of an Apartment shall be jointly 
and severally liable with the former Proprietary Lessee thereof 
for all unpaid assessments against that Proprietary Lessee or his 
shares which became due before the new Proprietary Lessee 
acquired ownership thereof." 
 
Plaintiff also relies on Sections 12.1 and 12.2 of the 
bylaws.  The latter section provides that every assessment 
becomes a lien against the lessee's shares, "effective as of the 
date such assessment is made."  The section also provides that 
the lien "shall be prior to all liens and encumbrances recorded 
after the effective date thereof except for any Mortgage," 
defined in the relevant documents as a first deed of trust on a 
proprietary lease.  The former section, in subsections (c) and 
(f), provides that the remedies set forth in the bylaws are 
 
 
 
 
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cumulative and are not subject to preclusion by election of 
remedies. 
 
Plaintiff argues the trial court "concluded that the back 
assessments operated as liens on the property but did not create 
a cause of action for a money judgment" against defendant.  
Plaintiff contends the trial court erroneously ruled that its 
sole cause of action is one to enforce the liens, not one for a 
personal money judgment, and that this ruling deprives it of the 
cumulative remedies afforded by the bylaws and the Virginia Real 
Estate Cooperative Act (the Act).  We disagree. 
 
The applicable provisions of the bylaws and the Act simply 
do not address foreclosure by a mortgage lender, and the 
liability of the foreclosure purchaser for assessments unpaid by 
the former owners of the proprietary leases foreclosed upon.  
Foreclosure is not mentioned in bylaw Section 7.3 entitled 
"Liability for Assessments," the "foundation" of plaintiff's 
claim; in plain language, the section contemplates only a 
transfer of a proprietary lease by a means other than foreclosure 
by a mortgage lender.  Bylaw Section 12.1 mentions foreclosure in 
subsection (f) labelled "Legal Proceedings," but speaks only to 
foreclosure of the lien for assessments.  Bylaw Section 12.2 
entitled "Lien for Assessments," does not mention foreclosure by 
a mortgage lender. 
 
Code § 55-472 of the Act, relied upon by the plaintiff, 
deals with remedies for nonpayment of assessments.  But the 
 
 
 
 
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statute does not address foreclosure by a mortgage lender, and 
recovery of unpaid assessments through a personal judgment 
against the foreclosure purchaser. 
 
Moreover, the evidence fails to establish that the  
defendant agreed to be liable personally for unpaid assessments 
of the prior lessees.  Each "Memorandum of Sale," over a space 
for a "Purchaser" to sign, provides:  "I further acknowledge that 
this purchase is subject to the terms and conditions of the 
attached Notice of Trustee's Sale and the attached 
Announcements."  But neither memorandum is signed by an 
individual purporting to represent defendant; handwritten on the 
"Purchaser" line merely is "American Landmark Equity Corp."  
Thus, even if plaintiff is correct that somehow the "subject to" 
language in the memoranda would impose personal liability upon a 
foreclosure purchaser who signed them, there is no evidence in 
the record that a person authorized to bind defendant signed 
either memorandum promising or agreeing to pay the debt. 
 
Finally, plaintiff relies upon In re Rosenfeld, 23 F.3d 833 
(4th Cir.), cert. denied, ___ U.S. ___, 115 S.Ct. 200 (1994), a 
case applying the Act but a case that is inapposite.  There the 
issue was "whether a discharge in bankruptcy relieves a debtor 
from personal liability for post-petition assessments of 
cooperative housing dues."  Id. at 835.  Unlike the present 
litigation, that case involved a cooperative's efforts to recover 
delinquent assessments directly from the owner who incurred the 
 
 
 
 
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debt, not from a subsequent foreclosure purchaser. 
 
Consequently, we hold that the trial court correctly ruled 
the plaintiff was not entitled to a personal money judgment for 
the delinquent assessments in issue against the defendant under 
these circumstances.  Thus, the judgment in favor of the 
defendant will be 
 
Affirmed.