Opinion ID: 4572403
Heading Depth: 1
Heading Rank: 1

Heading: Chalet Lots

Text: ¶ 17. We begin with the Chalet Lots. At the outset, we note, as did the trial court, that we have twice rejected challenges by other homeowners to the reasonableness of AHPOA’s fees. See Brewin, 2018 VT 88, ¶ 1; Deptula, 2003 VT 51, ¶ 1. While the deed language in Brewin differs in part from that involved here, Brewin nonetheless guides our analysis with respect to the Chalet Lots. We do not find Deptula distinguishable on the ground identified by plaintiffs to the extent plaintiffs’ argument can be understood. The legal principles we enunciated there plainly apply in this case. See 2003 VT 51, ¶¶ 23, 26 (explaining that deeds at issue allowed AHPOA to “collect a reasonable fee, as opposed to requiring a pro rata share of actual costs,” and that, “[c]onsidering the entire record,” homeowners raised no genuine issue of material fact showing 7 that the nonmembers’ rate structure or fees were unreasonable,” and recognizing that “repeated judicial determinations ha[d] reached the same conclusion”). ¶ 18. In Brewin, 2018 VT 88, AHPOA filed suit to collect unpaid annual assessments from the defendants, who owned a Chalet Lot. As here, the defendants’ deed required AHPOA to maintain the right-of-way, supply water, supply garbage removal, and maintain the streetlights. The deed provided that these services would be provided “at a fee to be determined by the grantor.” Id. ¶ 6. We held that AHPOA’s fee was “subject to the implied covenant of good faith and fair dealing,” and thus, “the appropriate question” was “whether the fee that AHPOA charged fell beyond the bounds of reasonableness.” Id. ¶¶ 18, 19. We are faced with a similar question here. ¶ 19. We concluded in Brewin that the defendants failed to “establish that AHPOA violated the community standards of decency, fairness or reasonableness that the covenant of good faith and fair dealing seeks to protect.” Id. ¶ 20 (quotation omitted). We emphasized that “AHPOA presented substantial evidence to support the reasonableness of its assessment, [and] [the] defendants presented no evidence of bad faith.” Id. We found unpersuasive “[the] defendants’ two primary counterarguments—[that] they should only be accountable for their share of that portion of the Alpine Haven road network that is coextensive with their right-of-way and that they should not be compelled to share in the full cost of the overhead associated with AHPOA’s performance of its duties.” Id. ¶ 20. In reaching our decision, we recounted the “substantial evidence” that AHPOA presented “to support the reasonableness of its assessment.” Id. ¶ 21. AHPOA explained why it was neither feasible nor reasonable to base its fees on “actual use.” Id. ¶ 22. The trial court had determined “that AHPOA’s assessment reflected its expenses,” and we noted that we had “deemed the precise approach taken by AHPOA—an annual fee based on actual costs plus overhead—to be reasonable” in a prior case. Id. ¶ 24. Indeed, we found the same fee, adjusted for inflation, reasonable in Deptula. Id. 8 ¶ 21. We found the assessment within the bounds of reason even if the defendants were correct that their deed obligated them to pay only for the use of a limited right-of-way, rather than share in the costs of the entire road network. Id. ¶ 26. We also found that AHPOA’s inclusion of overhead costs in its annual assessment did not show bad faith and there was no showing that the overhead charged was unreasonable. Id. ¶¶ 28-29. “We thus conclude[d], as a matter of law, that AHPOA did not breach the covenant of good faith and fair dealing in determining the fee charged to [the] defendants for its services.” Id. ¶ 30. ¶ 22. We reach the same conclusion here with respect to the Chalet Lots. As in Brewin, the fee that AHPOA charges must be “reasonable,” i.e., “within the bounds of reason.”4 Id. ¶ 26. The term “reasonable” is used expressly in plaintiffs’ deeds and need not be implied as in Brewin. As in Brewin, AHPOA submitted extensive evidence in support of its summary judgment motion to show how it calculated its fees and why its fees were reasonable. This included, among other things: deposition testimony from Nicholas Barletta, a former Certified Public Accountant and AHPOA president; the Service Costs and Fee Structure Reports he developed based on his review of six years of expenses; a letter from a CPA firm that reviewed the Fee Structure Reports; an affidavit from Mr. Barletta; an affidavit from Michael Patch, who was an expert witness on road costs and fees, and who opined that the overall road costs were reasonable and less expensive than those in other developments; and an affidavit from Walter Knight, an AHPOA board member, who 4 As in Brewin, “the analysis in this case” with respect to the Chalet Lot plaintiffs “begins and ends with the provisions in [their] deeds, which allow AHPOA to set the fees, subject to the constraints of good faith and fair dealing.” 2018 VT 88, ¶ 15. Given that their deeds allow AHPOA to charge a reasonable fee for the services it provides, we reject plaintiffs’ suggestion that the equitable principles of Hubbard, 144 Vt. 373, 477 A.2d 972, apply. See Brewin, 2018 VT 88, ¶ 17 (so holding) (citing Hubbard, 144 Vt. at 375-76, 477 A.2d at 973 (“The obligation to contribute [rateably to the discharge of the burdens incident to the existence of the common benefit] applies in the absence of an express agreement . . . .”) and 19 V.S.A. § 2702 (“In the absence of an express agreement or requirement governing maintenance of a private road, when more than one person enjoys a common benefit from a private road, each person shall contribute rateably to the cost of maintaining the private road . . . .” (emphasis added)). 9 attested to his experience in property acquisition and development in Vermont and expressed his opinion that ease of road access significantly increases the value of parcels of land, and who also outlined ways in which road maintenance benefited the Large Lots. Plaintiffs did not, in response, provide evidence to show that AHPOA’s fee was unreasonable. Its conclusory assertions do not suffice. ¶ 23. We find plaintiffs’ attacks on AHPOA’s evidence unpersuasive. As set forth above, AHPOA provided sufficient evidence to support its summary judgment motion. Based on its analysis of six years of costs, it created a tiered fee structure. It identified particular service areas and calculated overhead by establishing what percentage of costs each service area represents, and it then applied this percentage to the total overhead. ¶ 24. Contrary to plaintiffs’ assertion, AHPOA’s fee schedule was both examined and supported. Mr. Barletta was AHPOA’s president and plaintiffs do not dispute that he had “a long career doing financial work” and that he was a retired CPA. He developed the tiered fee structure based on his review of six years of costs and he testified that, based on his experience, the fee structure was reasonable for all classes of Alpine Haven owners. He also testified that an outside CPA firm had reviewed and analyzed the fee schedule. Mr. Patch testified as an expert that the road fees were reasonable. In his affidavit, he described his extensive experience, the evidence that he relied on to reach his conclusion, the conditions in Alpine Haven that affect road maintenance, AHPOA’s responsibilities with respect to road management, his visit to the site and review of the road system, his meetings with AHPOA road staff and his review of hourly costs, material costs, maintenance schedules, and equipment. He based his opinion on his expertise in establishing and maintaining roads and his review of these materials. Plaintiffs’ assertion that AHPOA’s experts provided “nothing but a bottom line,” Mid-State Fertilizer Co. v. Exch. Nat’l Bank of Chicago, 877 F.2d 1333, 1339 (7th Cir. 1989), is belied by the record. 10 ¶ 25. We note, moreover, that plaintiffs could have deposed AHPOA’s road expert or put forth evidence from their own experts, but they did not do so. It is not sufficient to claim the fees are “unreasonable” simply because they are not broken down in the way that plaintiffs seek or because they are not calculated the way plaintiffs argue they should be. Plaintiffs needed to provide evidence in support of these assertions, not just conclusory arguments. ¶ 26. We found the inclusion of overhead and the amount of overhead reasonable in Brewin, and we find no basis to reach a different conclusion here. 2018 VT 88, ¶¶ 28-29 (concluding that plaintiffs failed to show that “AHPOA acted in bad faith by including its overhead costs in its annual assessment” and failed to show that overhead costs, which included litigationrelated expenses, were unreasonable). AHPOA’s overhead costs are based on a percentage of its total costs by category. Plaintiffs pay for deeded services and a share of overhead attributable to these services. AHPOA was not required to provide plaintiffs with a detailed breakdown of overhead costs and its failure to do so does not create a factual dispute, as plaintiffs argue. Its decision to adjust the overhead costs for certain seasonable services, like the pool and driveway plowing, that share overhead with other year-round services was reasonable. ¶ 27. AHPOA also provided an undisputed reasoned basis for its imposition of an additional service fee on nonmembers. In his affidavit, Mr. Barletta explained that AHPOA members had a responsibility and liability that nonmembers did not. He stated that members donated their time and expertise to manage and operate AHPOA’s resources in a way that benefits the entire Alpine Haven community. The 15% surcharge was added to account for the nonmonetary contribution of AHPOA members. It is reasonable to require all homeowners who share and benefit from the work that goes into providing deeded services to share the cost of that service, including attempting to equalize nonmonetary contributions among Alpine Haven residents. The resulting fee is less than the member fee and within the bounds of reasonableness. 11 ¶ 28. With respect to the provision of garbage service we agree with the trial court that plaintiffs’ deeds plainly do not condition AHPOA’s right to charge a reasonable fee for this service on plaintiffs’ actual use of this service. Plaintiffs indicated in their response to interrogatories that they want the option of periodically stopping, but not formally terminating, their deeded right to garbage removal. In his affidavit, Mr. Barletta averred that AHPOA did not provide rebates to homeowners who periodically declined garbage service because AHPOA had an obligation to provide the service and it incurred costs to maintain its capacity to do so. Absent a formal and final relinquishment of plaintiffs’ right to garbage removal under their deeds, it is reasonable for AHPOA to include a charge for garbage removal as part of a “reasonable fee” to account for its fixed costs in providing this service and to ensure its ability to continue providing this service in the future. ¶ 29. Plaintiffs argue that the garbage-removal provision in their deeds does not run with the land, but they do not recite the elements applicable to such an assertion or discuss why they are not satisfied here. See Albright v. Fish, 136 Vt. 387, 393, 394 A.2d 1117, 1120 (1978) (stating that for covenant to run with the land, it “must be in writing,” “the parties must intend that the covenant run with the land,” “the covenant must ‘touch and concern’ the land,” and “there must be privity of estate between the parties”). Their briefing on this point is inadequate. See Johnson v. Johnson, 158 Vt. 160, 164 n., 605 A.2d 857, 859 n. (1992) (stating that this Court will not address contentions so inadequately briefed as to fail to minimally meet standards of V.R.A.P. 28(a)); V.R.A.P. 28(a)(4) (providing that appellant’s brief should explain what issues are presented, how they were preserved, and what appellant’s contentions are on appeal, with citations to authorities, statutes, and parts of record relied upon). ¶ 30. In support of this argument, plaintiffs simply assert that if the Alpine Haven property owner in 171234 Canada Inc. v. AHA Water Coop., Inc. 2008 VT 115, 184 Vt. 633, 968 A.2d 303 (mem.), was allowed to terminate a deed provision stating that the grantor would provide 12 water to its premises, then “[i]t is difficult to imagine that the grantor would have intended to have customers to be bound to his system of garbage collection.” There is no basis to infer such intent here. In 171234 Canada Inc., the trial court found the applicable covenant—wherein the grantor “agree[d] to supply water to said premises as now piped”—to be ambiguous. 2008 VT 115, ¶ 2. To support its interpretation of this ambiguous provision, the property owner submitted an “affidavit from the original developer of Alpine Haven, who stated that his intent in drafting the covenant language was to require lot owners to pay for water only if they chose to receive it.” Id. ¶ 5. The trial court’s decision rested largely on this affidavit; it further found that the property owner’s decision to terminate the water service was consistent with the bylaws in effect at the time, a position that was uncontested. Id. ¶¶ 7, 13. ¶ 31. Plaintiffs did not present any evidence similar to that presented in 171234 Canada Inc. and their reliance on this case is unpersuasive. Because plaintiffs offer no support for the premise of their argument, we do not consider their assertion that if garbage removal “is not a deeded servitude,” then it “must be a service contract.” ¶ 32. Finally, we conclude as a matter of law that clearing the roads of snow lies within a commonsense understanding of the term “maintenance.” See, e.g., In re Vt. State Emps.’ Ass’n, 2005 VT 135, ¶ 14, 179 Vt. 578, 893 A.2d 338 (mem.) (“Where, as here, the language of a contract is clear, the parties are presumed to be bound by the plain and ordinary meaning of the language used.”). It is a necessary part of keeping the roads in good and reasonable condition as required by the terms of the Chalet Lot deeds. ¶ 33. We find plaintiffs’ reliance on Croton River Club, Inc. v. Half Moon Bay Homeowners Ass’n (In re Croton River Club, Inc.), 52 F.3d 41 (2d Cir. 1995), misplaced. In that case, the court reviewed an allocation made by a homeowners’ association for a planned community that included a marina. Individuals who owned marina slips, but not homes, were charged a portion of the annual budget, but only homeowners could vote on the budget allocations. 13 During the period in question, the homeowners voted to have the owners of the marina slips pay a much larger share of the budget than in prior years—53% as opposed to 14.25%—“a three-fold percentage increase in the amount of the allocation from previous years and over an eight-fold increase in the dollar amount of the allocation initially recommended by the managing agent for the Homeowners Association.” Id. at 43. ¶ 34. The court determined that this allocation was not protected by the business judgment rule, which “precludes judicial inquiry into the actions of corporate directors so long as those actions were taken in good faith and after a reasonable investigation.” Id. at 44. “[I]f the business judgment rule does not protect a board’s decision, then the burden falls upon the board to demonstrate that its actions were reasonable and/or fair.” Id. ¶ 35. The Croton court found that the “Homeowners Association failed to carry the burden of showing reasonableness.” Id. at 45. Its allocation “included a number of line items representing expenses that either did not benefit or only tangentially benefited the marina slipowners,” including paying more than half of “the salary of the manager of the residences . . . even though the manager has no duties relating to the marina” and paying pool expenses when marina slipowners were not allowed to use the pool. Id. The court also found “a 53% allocation for the marina . . . facially unreasonable because the different wear and tear on property resulting from year-long residential use [was] significantly greater than seasonal riverbank use.” Id. Based on these shortcomings, the court found the allocation “so unreasonable that bad faith must be inferred.” Id. It determined that “[t]he record strongly indicates that the dominating consideration in fashioning the Marina Allocation was the residential owners’ desire to lessen their own costs and that the incantations of the business judgment rule [were] driven by the lack of a legitimate rationale for the Allocation.” Id. ¶ 36. We are faced with a much different situation here. The business judgment rule does not apply, nor does the burden-shifting analysis identified by the court above. Plaintiffs here made 14 no showing of bad faith, and certainly we do not find AHPOA’s fee unreasonable on its face. The fact remains that plaintiffs failed to put forth any evidence that would create a material question of fact as to the reasonableness of AHPOA’s fee. Summary judgment was properly granted to AHPOA with respect to the Chalet Lot plaintiffs.