Court Opinion

ID: 4149105
Source: CourtListenerOpinion
Date Created: 2017-02-28 21:07:32.47726+00
Date Added: 2024-06-11T07:46:29.253030
License: Public Domain

COLORADO COURT OF APPEALS                                          2017COA19

Court of Appeals No. 15CA1776
Pitkin County District Court No. 10CV201
Honorable Denise K. Lynch, Judge
Honorable Gail H. Nichols, Judge

Robert A. Francis, as Trustee of the Judi B. Francis Irrevocable Trust, and as
Trustee of the Robert A. Francis Irrevocable Family Trust; Judi B. Francis, as
Trustee of the J. Lee Browning Belize Trust; Leslee K. Francis; Judi B. Francis
Irrevocable Trust; Robert A. Francis Irrevocable Family Trust; and J. Lee
Browning Belize Trust,

Plaintiffs-Appellants,

v.

Aspen Mountain Condominium Association, Inc., a Colorado not for profit
corporation; Donald Miller, in his capacity as member of the Board of Directors
of the Aspen Mountain Condominium Association; Steve Daubenmier, in his
capacity as member of the Board of Directors of the Aspen Mountain
Condominium Association; and Bruce Lynton, in his capacity as member of the
Board of Directors of the Aspen Mountain Condominium Association,

Defendants-Appellees.

            JUDGMENT AFFIRMED IN PART, REVERSED IN PART,
                AND CASE REMANDED WITH DIRECTIONS

                                      Division VI
                             Opinion by JUDGE TERRY
                         Loeb, C.J., and Furman, J., concur

                           Announced February 23, 2017

George M. Allen, Telluride, Colorado, for Plaintiffs-Appellants

John M. Lassalett, P.C., John M. Lassalett, Aspen, Colorado; Younge &
Hockensmith, P.C., Benjamin M. Wegener, Grand Junction, Colorado, for
Defendants-Appellees
¶1    The Francis parties — multiple trusts and their fiduciaries, as

 well as other individuals with an ownership interest in Unit 1-A of

 the Aspen Mountain Condominiums — appeal several trial court

 orders and a judgment of foreclosure in favor of the Aspen

 Mountain Condominium Association, Inc.; and various other

 persons in their capacity as board members of the Association

 (collectively referred to as AMCA).

¶2    As an issue of first impression, we consider and reject AMCA’s

 proposed limitations on the holding of DA Mountain Rentals, LLC v.

 Lodge at Lionshead Phase III Condominium Ass’n, 2016 COA 141.

 We affirm in part, reverse in part, and remand the case to the trial

 court for further proceedings.

                             I. Background

¶3    The parties’ dispute began with a contested 2010 vote that

 amended the original 1972 condominium declaration to reallocate

 the common interest shares and common expenses. The 1972

 declaration had originally allocated common interest shares and

 common expenses based on unit size, and as owners of Unit 1-A,

 one of the smaller units, the Francis parties saw their common

 expenses increase when the amended declaration reallocated

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 common interest shares equally among all units. The Francis

 parties cast the only vote against the amended declaration. Two

 lawsuits arose out of AMCA’s approval of the amended declaration.

 The first, filed by the Francis parties, sought a judgment voiding the

 reallocation of the common interest shares. After AMCA filed the

 second suit to recover unpaid assessments and foreclose on the

 unit, the court consolidated the cases.

¶4    Following extensive litigation, the trial court ruled in favor of

 AMCA, finding that the 2010 amendment had been properly

 adopted. The court also entered a decree of judicial foreclosure

 against Unit 1-A based on the default in payments of the increased

 assessments due under the new declaration.

            II. Impact of CCIOA on the 1972 Declaration

¶5    The Francis parties first contend that the trial court erred by

 partially granting AMCA’s motion for a determination of law. The

 court held that the Colorado Common Interest Ownership Act

 (CCIOA), sections 38-33.3-101 to -402, C.R.S. 2016, which went

 into effect in 1992, Ch. 283, sec. 2, 1991 Colo. Sess. Laws 1757,

 nullified the 1972 declaration’s requirement of a unanimous vote to

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 alter ownership interests in the common elements. We agree that

 this ruling was in error.

                             A. Preservation

¶6    AMCA asserts that this issue was not preserved for our review

 because the trial court struck as untimely the Francis parties’ brief

 contesting AMCA’s motion for a determination of law as to

 application of the 67% voting threshold. We disagree. Because this

 issue of law was raised and was ruled on by the trial court, it is ripe

 for appellate review.

                         B. Standards of Review

¶7    When a motion is filed under C.R.C.P. 56(h), a district court

 may enter an order deciding a legal question “[i]f there is no genuine

 issue of any material fact necessary for the determination of the

 question of law.” We review a court’s ruling on such a motion de

 novo. Coffman v. Williamson, 2015 CO 35, ¶ 12.

¶8    In interpreting a statute, our primary goals are to discern and

 give effect to the General Assembly’s intent. Krol v. CF & I Steel,

 2013 COA 32, ¶ 15. We look first to the statutory language, giving

 the words and phrases used therein their plain and ordinary

 meanings. Id. We read the language in the dual contexts of the

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  statute as a whole and the comprehensive statutory scheme, giving

  consistent, harmonious, and sensible effect to all of the statute’s

  language. Id. After doing this, if we determine that the statute is

  not ambiguous, we enforce it as written and do not resort to other

  rules of statutory construction. Id.

¶9     We also interpret the terms of a condominium declaration de

  novo, giving terms their plain and ordinary meanings; if the terms

  are clear and unambiguous, we will enforce them as written. Vista

  Ridge Master Homeowners Ass’n v. Arcadia Holdings at Vista Ridge,

  LLC, 2013 COA 26, ¶ 18.

               C. The Original Condominium Declaration

¶ 10   Paragraph 28 of the 1972 declaration states, “the percentage

  of the undivided interest in the general common elements

  appurtenant to each apartment unit . . . shall have a permanent

  character and shall not be altered without the consent of all of the

  condominium unit owners as expressed in a duly recorded

  amendment to this Declaration.” Thus, the declaration required a

  unanimous vote in order to alter the percentage of the undivided

  interests in the general common elements.

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          D. CCIOA’s Impact on the Unanimity Requirement

¶ 11   AMCA asserts that a provision of CCIOA, section

  38-33.3-217(1)(a)(I), C.R.S. 2016, retroactively lowered the voting

  threshold for amending declarations to 67% and thus superseded

  the original declaration’s unanimity requirement. However, this

  reading of the statute ignores another statutory provision that

  controls here.

¶ 12   Because the Aspen Mountain Condominiums are a common

  interest community created before 1992, only certain enumerated

  provisions of CCIOA apply to the condominium association. §§ 38-

  33.3-117(1), (1.5), C.R.S. 2016. Section 38-33.3-117(1.5) applies

  section 38-33.3-217(1), “Amendment of declaration,” to existing

  communities for events occurring on and after January 1, 2006. As

  a result, the amendment provision applied to AMCA at the time of

  the 2010 vote amending the declaration.

¶ 13   In general, section 38-33.3-217(1)(a)(I) lowers the voting

  threshold for amending a declaration by providing as follows:

            [T]he declaration . . . may be amended only by
            the affirmative vote or agreement of unit
            owners of units to which more than fifty
            percent of the votes in the association are
            allocated or any larger percentage, not to

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             exceed sixty-seven percent, that the
             declaration specifies. Any provision in the
             declaration that purports to specify a
             percentage larger than sixty-seven percent is
             hereby declared void as contrary to public
             policy, and until amended, such provision shall
             be deemed to specify a percentage of sixty-
             seven percent.

  (Emphasis added.)

¶ 14   Yet, a further reading of section 38-33.3-217(1)(a)(I) reveals an

  exception to the new 67% threshold. See DA Mountain Rentals,

  ¶ 33. The first sentence of 38-33.3-217(1)(a)(I) provides that its

  provisions apply “[e]xcept as otherwise provided in subparagraphs

  (II) and (III) of this paragraph (a).” Subparagraph (III) states that

  paragraph (a) shall not apply “[t]o the extent that its application is

  limited by subsection (4) of this section.” § 38-33.3-217(1)(a)(III)(A).

¶ 15   Subsection (4)(a) carves out an exception, validating an

  original declaration’s requirement of a unanimous vote to alter

  common interests. That subsection provides:

             Except to the extent expressly permitted or
             required by other provisions of this article, no
             amendment may . . . change the boundaries of
             any unit or the allocated interests of a unit in
             the absence of a vote or agreement of unit
             owners of units to which at least sixty-seven
             percent of the votes in the association . . . are

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             allocated or any larger percentage the
             declaration specifies.

  (Emphasis added.) The phrase, “or any larger percentage the

  declaration specifies,” recognizes the continued validity of any pre-

  CCIOA declaration requirement for a voting threshold in excess of

  67% in order to change the allocated interest of a unit. DA

  Mountain Rentals, ¶ 33. We agree with the reasoning of the division

  in DA Mountain Rentals, and we apply it here.

¶ 16   In doing so, we reject the argument that because the

  condominium association was created before CCIOA was enacted, it

  has never been subject to the provisions of section 38-33.3-217(4).

  AMCA contends that section 38-33.3-117(1.5)(d) applies subsection

  (1) of section 38-33.3-217 to pre-existing communities, and that

  subsection (4) is not among the subsections that apply to such

  communities. Because this argument disregards applicable

  statutory provisions, we reject it.

¶ 17   As noted, the legislature made section 38-33.3-217(1)

  applicable to pre-existing communities. And subsection (1)(a)(III)(A)

  — a part of the section that imposes the 67% limitation — limits the

  application of paragraph (a) “[t]o the extent that its application is

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  limited by subsection (4).” Because subsection (4) is specifically

  referenced in subsection (1), subsection (4) provisions are also

  applicable to communities that predate CCIOA for purposes of

  determining whether an “amendment may create or increase special

  declarant rights, increase the number of units, or change the

  boundaries of any unit or the allocated interests of a unit.” § 38-

  33.3-217(4)(a).

¶ 18   AMCA further contends that maintaining a unanimous voting

  requirement to reallocate common elements defies CCIOA’s

  pronouncement that declaration provisions requiring voting

  percentages higher than 67% are “void as contrary to public policy,”

  § 38-33.3-217(1)(a)(I), and thwarts its stated legislative goals of

  providing flexibility and “effective and efficient property

  management,” § 38-33.3-102, C.R.S. 2016. AMCA asserts that, by

  allowing a single owner to veto declaration amendments, such a

  unanimous voting requirement would render section 38-33.3-

  217(1)’s lower 67% threshold meaningless. We reject these

  contentions.

                                      8
¶ 19   We note that the language of subsection (1)(a)(I) addresses

  amendment of a declaration, including plats and maps. Subsection

  (4)(a) deals much more specifically with changes in property rights.

¶ 20   The legislature apparently reasoned that for voting on matters

  of such property rights — changing allocated ownership interests in

  a unit, modifying unit boundaries, increasing the number of units,

  or modifying special declarant rights — a voting threshold of 67%

  would be sufficient unless the original declaration requires a higher

  voting percentage, and that where the original declaration does

  require a vote of more than 67% to change such interests, that

  requirement does not violate public policy and will be enforced.

  This reading is supported by the words “at least” in subsection

  (4)(a): by specifying that no amendment can change such interests

  in the absence of a vote of “at least” 67% of the votes of the

  association, the statute contemplates that 67% is not the maximum

  allowed threshold voting requirement. Such alterations of property

  interests are much more consequential than the goals of efficiency

  and flexibility that are deemed sufficiently protected by the 67%

  threshold referenced in subsection (1)(a)(I). The various CCIOA

  provisions indicate the legislature’s public policy determinations. It

                                     9
  is the province of the legislature to enact laws to effectuate public

  policy, and absent constitutional infringement, we will not construe

  statutes in a manner that changes the enacted policy initiatives.

  Bunch v. Indus. Claim Appeals Office, 148 P.3d 381, 385 (Colo. App.

  2006).

¶ 21   The Francis parties also argue that if we were to read the 67%

  threshold to apply to all votes relating to declarations and property

  interests, then the statutory language, “or any larger percentage the

  declaration specifies” in subsection (4)(a) would be rendered

  superfluous. We agree. We will not read a statute in a manner that

  renders any of its provisions superfluous. Avalanche Indus., Inc. v.

  Indus. Claim Appeals Office, 166 P.3d 147, 152 (Colo. App. 2007),

  aff’d, 198 P.3d 589 (Colo. 2008).

¶ 22   AMCA contends that nothing in subsection (4) is applicable to

  communities that predated CCIOA’s enactment, and that

  subsection (4) applies only to communities created after enactment.

  If we were to read subsection (4) to apply only to post-CCIOA

  communities, then pre-CCIOA communities would not be subject to

  the higher vote threshold specified in the original declaration to

  change allocated interests in common areas, but post-CCIOA

                                      10
  communities could be subject to such a higher vote threshold if

  such a higher threshold is specified in the declaration. We see no

  basis in the statute for such disparate results.

¶ 23   We conclude that subsection (4)(a) is applicable to

  communities that predated CCIOA’s enactment. Under the facts

  presented here, that subsection controls over the 67% provision of

  subsection (1)(a)(I). Thus, CCIOA did not invalidate the 1972

  declaration’s requirement of unanimous consent to reallocate the

  percentage of the common interests. As a result, the trial court’s

  ruling in favor of AMCA — declaring that the 2010 vote reallocating

  the common interests was valid — was erroneous as a matter of

  law, and we reverse that ruling.

                III. Denial of Leave to Amend Complaint

¶ 24   The Francis parties also contend that the trial court erred in

  denying their motion for leave to amend the complaint to assert

  additional breach of fiduciary duty claims against AMCA. We

  disagree.

               A. Standard of Review and Applicable Law

¶ 25   Leave to amend a pleading is within the trial court’s discretion,

  and absent an abuse of such discretion, we will not disturb the trial

                                     11
  court’s ruling. Polk v. Denver Dist. Court, 849 P.2d 23, 25 (Colo.

  1993). A court abuses its discretion when its ruling is (1) based on

  an erroneous understanding or application of the law; or (2)

  manifestly arbitrary, unreasonable, or unfair. People v. Esparza-

  Treto, 282 P.3d 471, 480 (Colo. App. 2011).

¶ 26   C.R.C.P. 15(a) generally establishes that a court shall freely

  give leave to amend “when justice so requires.” However, C.R.C.P.

  15(a)’s requirement of liberal leave to amend is not without limits.

  Polk, 849 P.2d at 25. In evaluating a motion for leave to amend, a

  trial court must consider the totality of the circumstances,

  including “undue delay, bad faith or dilatory motive on the part of

  the movant, repeated failure to cure deficiencies by amendments

  previously allowed, undue prejudice to the opposing party by virtue

  of allowance of the amendment, [or] futility of amendment.” Id. at

  25-26 (quoting Varner v. Dist. Court, 618 P.2d 1388, 1390 (Colo.

  1980)).

¶ 27   While a delay in the litigation alone is not reason enough to

  deny leave to amend, denial is proper in circumstances including

  where numerous delays have already occurred, the proposed

  amendment is not tendered until shortly before trial, and no

                                    12
  justification appears for further delay in bringing the litigation to an

  end. Id. at 26.

                              B. Discussion

¶ 28   In its order denying the Francis parties leave to amend, the

  trial court noted that the motion was submitted after the discovery

  deadline and only a few months before trial. The court further

  reasoned that the case had been pending for more than five years

  and the Francis parties had already amended the complaint five

  times during which they could have added the newly asserted

  claim.

¶ 29   The court did not abuse its discretion in denying leave to

  amend. The delayed timing of the proposed amendment, the length

  of time the case had already been pending, and the Francis parties’

  failure to explain why they could not have added a breach of

  fiduciary duty claim in an earlier amended complaint all support

  the court’s decision to deny leave to amend. See id. at 25-26.

   IV. Denial of C.R.C.P. 59(a) Motion to Amend the Judgment Based
                 on Failure to Join Indispensable Parties

¶ 30   Next, the Francis parties argue that the trial court erred by

  denying their C.R.C.P. 59(a) motion to amend the judgment based

                                     13
  on failure to join as indispensable parties the beneficiaries of the

  various trusts included among the Francis parties. See C.R.C.P.

  19(a) (describing persons to be joined as parties if feasible).

¶ 31   Because a court can act after judgment to protect absent

  indispensable parties, see Clubhouse at Fairway Pines, L.L.C. v.

  Fairway Pines Estates Owners Ass’n, 214 P.3d 451, 454-55 (Colo.

  App. 2008), we reject AMCA’s assertion that this issue was not

  preserved for our review.

¶ 32   However, we are not persuaded that the trial court erred by

  declining to join the additional parties. Under C.R.C.P. 19(a), a

  person to be joined in an action “if feasible” includes any person

  who is

             properly subject to service of process . . . [and]
             (1) In [whose] absence complete relief cannot
             be accorded among those already parties, or
             (2) [who] claims an interest relating to the
             subject of the action and is so situated that
             the disposition of the action in [the person’s]
             absence may: (A) As a practical matter impair
             or impede [the person’s] ability to protect that
             interest or (B) leave any of the [existing parties]
             subject to a substantial risk of incurring
             double, multiple, or otherwise inconsistent
             obligations by reason of [the person’s] claimed
             interest.

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¶ 33   The proposed additional parties were alleged to be

  beneficiaries of trusts. Those trusts were already parties to the

  action, and were represented by their respective trustees. As a

  matter of law, the beneficiaries’ interests were sufficiently protected

  by the trustees’ participation in the action on their behalf. See

  § 15-1-804(2)(r), C.R.S. 2016 (as the fiduciary of a trust, a trustee

  has the power “[t]o . . . contest, or otherwise settle claims by or

  against the . . . trust, . . . by compromise, arbitration, or

  otherwise”); see also Fry & Co. v. Dist. Court, 653 P.2d 1135, 1139

  (Colo. 1982) (ruling that estate beneficiaries were not indispensable

  parties to partition action commenced by personal representative of

  estate); cf. Howard v. Int’l Trust Co., 139 Colo. 314, 323-24, 338

  P.2d 689, 693-94 (1959) (in litigation between trustee and a

  stranger to the trust, where trustee alleged that trust beneficiaries

  were indispensable parties, complete adjudication was had despite

  non-joinder of beneficiaries).

¶ 34   Therefore, the beneficiaries’ absence in their individual

  capacities did not “impair or impede” a complete adjudication of the

  parties’ rights. C.R.C.P. 19(a); see also § 15-1-509, C.R.S. 2016 (as

                                     15
  fiduciaries, trustees have a duty to act reasonably in managing

  trusts and to act in the interests of the beneficiaries).

               V. The Francis Parties’ Other Contentions

¶ 35   The Francis parties raise multiple additional appellate issues.

  These are based on the court’s denials of their pretrial motions for

  summary judgment. But because the Francis parties proceeded to

  a bench trial on the merits and did not renew at trial the arguments

  raised in their summary judgment motions, they failed to preserve

  these arguments for appeal. See Feiger, Collison & Killmer v. Jones,

  926 P.2d 1244, 1249-51 (Colo. 1996); cf. Top Rail Ranch Estates,

  LLC v. Walker, 2014 COA 9, ¶ 44 (in jury trial, failure to properly

  preserve an argument in motion for directed verdict operates as

  abandonment and waiver of issue previously raised in motion for

  summary judgment).

                             VI. Attorney Fees

¶ 36   AMCA requests an award of appellate attorney fees under

  C.A.R. 38, asserting numerous grounds.

¶ 37   To the extent they seek attorney fees under sections

  38-33.3-123 and -209.5, C.R.S. 2016 — CCIOA provisions relating

  to failure to timely pay assessments or any sums due to AMCA —

                                     16
  given our resolution of this appeal, it is unclear to us whether any

  assessments or other sums are due from the Francis parties to

  AMCA. Pursuant to C.A.R. 39.1, we therefore remand the case to

  the trial court to determine whether any such assessments are due,

  and to determine whether any attorney fees are owed by the Francis

  parties to AMCA in connection with this appeal.

¶ 38   We deny AMCA’s request for an award of attorney fees based

  on the Francis parties’ asserted failure to timely transmit the trial

  court record and based on the assertion that the Francis parties

  filed a frivolous appeal.

                              VII. Conclusion

¶ 39   The trial court’s January 4, 2013, order partially granting

  AMCA’s motion for a determination of law is reversed and the case

  is remanded for further proceedings. On remand, the trial court

  must declare invalid the amendment to the declaration to the extent

  it reallocated ownership interests in the common elements. The

  court must reconsider the propriety of the September 8, 2015,

  judgment and decree of foreclosure against the Francis parties in

  light of this disposition. The court must also consider whether any

  unpaid assessments are owed by the Francis parties, and, if so,

                                    17
whether appellate attorney fees are to be paid by the Francis parties

to AMCA under sections 38-33.3-123 and 38-33.3-209.5. In all

other respects, the judgment is affirmed.

     CHIEF JUDGE LOEB and JUDGE FURMAN concur.

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