Court Opinion

ID: 4033186
Source: CourtListenerOpinion
Date Created: 2016-09-13 15:07:23.451905+00
Date Added: 2024-06-11T14:08:58.257031
License: Public Domain

FILED
                                                        Sep 13 2016, 6:17 am

                                                             CLERK
                                                         Indiana Supreme Court
                                                            Court of Appeals
                                                              and Tax Court

ATTORNEY FOR APPELLANT                                     ATTORNEY FOR APPELLEE
Scott C. Andrews                                           John A. Stroh
Andrews Law Office, LLC                                    Sharpnack Bigley Stroh &
Columbus, Indiana                                          Washburn LLP
                                                           Columbus, Indiana

                                            IN THE
    COURT OF APPEALS OF INDIANA

Marvin Hamilton and                                        September 13, 2016
Linda Hamilton,                                            Court of Appeals Case No.
Appellants-Defendants,                                     03A05-1511-SC-1906
                                                           Appeal from the Bartholomew
        v.                                                 Superior Court
                                                           The Honorable James D. Worton,
Schaefer Lake Lot Owners                                   Special Judge
Association, Inc.,                                         Trial Court Cause No.
Appellee-Plaintiff                                         03D02-1309-SC-2182

Baker, Judge.

Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016          Page 1 of 10
[1]   Marvin and Linda Hamilton (collectively, the Hamiltons) appeal the trial

      court’s judgment entered against them and in favor of Schaefer Lake Lot

      Owners Association, Inc. (the Association). As consolidated and restated, the

      Hamiltons contend that they are not members of the Association and do not

      owe money for annual and special assessments, and that the statute of

      limitations bars claims for assessments made prior to 2008. Finding that the

      Hamiltons are members of the Association and therefore owe money for the

      assessments, and that the statute of limitations does not bar any of the

      Association’s claims, we affirm.

                                                      Facts
[2]   Schaefer Lake Addition was developed by Albert and Helen Schaefer in three

      sections: Section 1 was platted in 1960, Section 2 was platted in 1961, and

      Section 3 was platted later. In 1971, the Association was formed.

[3]   In 1973 or 1974, the Hamiltons purchased lot 89 in Section 2 of Schaefer Lake

      Addition. At the time of purchase, their property was subject to the Schaefer

      Lake Addition Covenants (Covenants). The Covenants provided the following:

              These covenants are to run with the land and shall be binding on
              all parties and all persons claiming under them for a period of
              twenty five years from the date this plat is recorded, after which
              time said covenants shall be automatically extended to successive
              periods of ten years unless an instrument signed by a majority of the
              then owners of the lots has been recorded agreeing to change said
              covenants in whole or in part.

      Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 2 of 10
      Defendant’s Ex. 1 (emphasis added). The Covenants did not mention

      requirements relating to membership in the Association and did not specify that

      lot owners have to pay any assessments to the Association.

[4]   In 1976, the Association amended its Articles of Incorporation, and in 1977, it

      filed the Amended Articles of Incorporation (Amended Articles) with the

      Secretary of State. The Amended Articles provided that a lot owner is entitled

      to membership in the Association and “said membership [is] predicated upon

      the remittance of the initial membership fee of $15.00.” Defendant’s Ex. 3.

      Also in 1977, Albert and Helen Schaefer recorded additional covenants entitled

      Declaration of Covenants (Declaration). The Declaration provided that any

      lots owned by anyone other than the Schaefers may be subject to the

      Declaration by voluntarily executing and recording a Supplementary

      Declaration of Covenant. The Schaefers could also subject additional lots

      owned by them to the Declaration by providing in a deed, original platting, or

      additions to the plats, that the lots be subject to, owned, held, and transferred

      under the provisions of the Declaration. The Declaration provided that any

      new owner must pay an initial membership fee of fifteen dollars, and that this

      fee is to be paid upon change of legal ownership, within thirty days of the date

      of transfer of legal title.

[5]   In 1996, owners of thirty of the fifty-eight Section 2 lots voted to amend the

      Covenants that related to Section 2. The amendment provided:

              All Lot Owners in Schaefer Lake Addition, Section 2, their
              assigns or successors, shall be members in Schaefer Lake Lot

      Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 3 of 10
              Owners Associates, Inc., an Indiana Corporation, or any
              successor to this organization, and shall be subject to all rules and
              regulations thereof.

              All Lots in Schaefer Lake Addition, Section 2, shall be subject to
              the covenants, restrictions, charges, liens, and provisions of the
              Declaration of Covenants executed by Albert A. Schaefer and
              Helen E. Schaefer, husband and wife, July 29, 1977, and
              recorded September 27, 1977, in the Office of the Recorder of the
              Bartholomew County, Indiana.

              These covenants are to run with the land and shall be binding on
              all parties and all persons claiming under them for a period of
              one year from the date this plat is recorded . . . .

      Plaintiff’s Ex. C.

[6]   In 2002, the Association adopted the Rules and Regulations of Schaefer Lake

      Lot Owners Associates, Inc. (Rules). The Rules provide that the Association

      can determine the need for and establish the amount of an annual assessment or

      special assessment against each lot.

[7]   On September 19, 2013, the Association filed a complaint against the

      Hamiltons in small claims court for non-payment of annual and special

      assessments. Following a July 10, 2015, bench trial, the court found for the

      Association, awarding a judgment of $4,240 and attorney fees of $1,760 for a

      total of $6,000 plus court costs of $91 and post-judgment interest. The

      Hamiltons now appeal.

      Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 4 of 10
                                    Discussion and Decision
[8]   The Hamiltons raise four issues, which we consolidate and restate as follows:

      whether the Hamiltons are members of the Association and, if so, whether they

      owe dues and assessments, and whether the statute of limitations has run on the

      action.

                                      I. Standard of Review
[9]   Small claims court judgments are “subject to review as prescribed by relevant

      Indiana rules and statutes.” Ind. Small Claims Rule 11(A). Pursuant to Trial

      Rule 52(A), the clearly erroneous standard applies to appellate review of facts

      determined in a bench trial with due regard given to the opportunity of the trial

      court to assess witness credibility. This deferential standard of review is

      particularly important in small claims actions, where trials are designed to

      speedily dispense justice by applying substantive law between the parties in an

      informal setting. Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind.

      2006). Parties in a small claims court bear the same burdens of proof as they

      would in a regular civil action on the same issues. Ind. Small Claims Rule

      4(A). It is incumbent upon the party who bears the burden of proof to

      demonstrate that it is entitled to the recovery sought. LTL Truck Serv., LLC v.

      Safeguard, Inc., 817 N.E.2d 664, 668 (Ind. Ct. App. 2004). We consider

      evidence in the light most favorable to the judgment, together with all

      reasonable inferences to be drawn therefrom. Id. at 667. We will reverse a

      judgment only if the evidence leads to but one conclusion and the trial court

      reached the opposite conclusion. Id.
      Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 5 of 10
                 II. Association Membership and Assessments
[10]   The Hamiltons argue that they are not members of the Association because the

       Covenants did not require membership in a lot owners’ association and did not

       require payment of dues and assessments. They also argue that they are not

       members of the Association because they never signed or agreed to the 1996

       amendments or voluntarily joined the Association.

[11]   Restrictive covenants serve in part “to maintain or enhance the value of land by

       controlling the nature and use of lands subject to a covenant’s provisions.”

       Grandview Lot Owner Ass’n, Inc. v. Harmon, 754 N.E.2d 554, 557 (Ind. Ct. App.

       2001) (internal quotation marks and citations omitted). They are a form of

       express contract recognized under the law. Id. As such, we apply the same

       rules of construction when a dispute arises as to a covenant’s terms. Harness v.

       Parkar, 965 N.E.2d 756, 760 (Ind. Ct. App. 2012). Restrictive covenants must

       be strictly construed, and all doubts should be resolved in favor of the free use

       of property and against restrictions. Id. The covenanting parties’ intent must be

       determined from the specific language used and from the situation of the parties

       when the covenant was made. Id.

[12]   The record here establishes that the Hamiltons purchased their lot subject to the

       Covenants. The Covenants expressly provided that the covenants are to run

       with the land and are binding on all parties subject to them. The Covenants

       also expressly provided that the Covenants could be amended through an

       instrument signed by a majority of the then lot owners and recorded. In 1996, a

       Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 6 of 10
       majority of lot owners did vote to amend the Covenants; the amendment

       provided that all lot owners are members of the Association and subject to the

       Association’s rules and regulations. In 2002, the Association adopted rules that

       allow it to establish annual and special assessments against each lot.

[13]   We disagree with the Hamiltons’ assertions that the amendment was outside

       the scope of the Covenants’ intended purpose and that the amendment was an

       attempt “to force an owner to join a lot owner’s association.” Appellant’s Br. p.

       7. The Covenants provided that they could be changed after twenty-five years

       had run, and the 1996 amendments were passed after this allotted time. The

       Covenants did not specify or restrict what changes could be made, but instead

       left any changes to the decision of the majority of lot owners. Thus, because

       the amendment was enacted by a majority of lot owners, it was within the

       scope of the Covenants’ intended purpose. Further, the amendment did not

       “force” the Hamiltons to become Association members; they bought their lot

       subject to the Covenants, thereby agreeing to be subject to the restrictions and

       regulations in the Covenants and any approved changes to the Covenants.

[14]   Nor has the fact that the Hamiltons have not paid a fifteen-dollar initial

       membership fee prevented them from becoming Association members.

       Although the Amended Articles provide that membership is predicated on the

       fee, this provision applied before all lot owners were required to be Association

       members. The 1996 amendments that make Association membership

       mandatory do not mention any fee for membership, thereby making all lot

       owners members regardless of any initial fee. Accordingly, their argument that

       Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 7 of 10
       they are not Association members because they did not pay the membership fee

       fails.

[15]   Finally, we are not persuaded by the Hamiltons’ argument that the Association

       did not prove by a preponderance of the evidence that the assessments they owe

       were validly approved. The Rules provide that the Association’s Board of

       Directors determines the need for and establishes the amount of an annual or

       special assessment, and that a majority of a quorum of members in good

       standing must approve the assessments. The Rules provide that the

       Association’s annual meeting is to take place in January, with the date, time,

       and place designated by the Board, and that special meetings may take place at

       the discretion of the Board. The Board must give notice of each meeting in

       writing by mailing or by placing a notice in the mailbox of the members not less

       than one week prior to a meeting.

[16]   We find that the Association presented sufficient evidence to show that the

       assessments the Hamiltons owe were validly approved. Christina Moore, the

       current Association president, who has been a resident of Schaefer Lake for

       eleven years, testified that the Board always mailed a letter to each lot owner

       with the date, time, and location of the annual meeting, two to three weeks in

       advance. The letter included a copy of the current year’s budget and the

       coming year’s estimated budget, an amount of the dues owed, and a form for

       proxy voting. Following the meeting, the Association mailed a letter with

       information about what took place at the meeting and an invoice for

       assessments. She also testified that the Association has followed this procedure

       Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 8 of 10
       since at least 2000, and that the Members passed an assessment each year since

       2004. Marvin Hamilton was aware that the Association had an annual

       meeting, he received letters about the meetings, and he knew that the

       Association decided on assessments at the meetings. In 2003, Linda Hamilton

       signed and submitted a proxy vote for them for that year’s annual meeting.

       Thus, we find that the Association met its burden of proof when establishing

       that the assessments were validly approved.

[17]   In sum, we agree with the trial court that, pursuant to the Association’s

       covenants, amendments and rules, the Hamiltons are Association members and

       must pay their annual and special assessments.

                                    III. Statute of Limitations
[18]   On appeal, the Hamiltons assert that the statute of limitations has run on any

       amount assessed prior to 2008. The Hamiltons did not raise the statute of

       limitations issue at trial. Failure to raise an issue at trial results in waiver of that

       issue. Van Winkle v. Nash, 761 N.E.2d 856, 859 (Ind. Ct. App. 2002).

[19]   Waiver notwithstanding, we find that the Association’s claim is within the

       statute of limitations for breach of contract actions. As noted above, restrictive

       covenants are a form of express contract recognized under the law. Grandview

       Lot Owner Ass’n, Inc., 754 N.E.2d at 557. An action based on a written contract

       must be commenced within ten years after the cause of action accrues. Ind.

       Code § 34-11-2-11. The Association filed its cause of action in 2013, seeking

       Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 9 of 10
       judgment for assessments dating back to 2004, which is within the ten-year time

       period provided by law.

[20]   The judgment of the trial court is affirmed.

       Bradford, J., and Altice, J., concur.

       Court of Appeals of Indiana | Opinion 03A05-1511-SC-1906 | September 13, 2016   Page 10 of 10