Court Opinion

ID: 4096841
Source: CourtListenerOpinion
Date Created: 2016-11-09 19:05:10.958244+00
Date Added: 2024-06-11T14:13:41.920828
License: Public Domain

COLORADO COURT OF APPEALS

Court of Appeals No. 15CA1139
Larimer County District Court No. 15CV30234
Honorable C. Michelle Brinegar, Judge

Mark R. Anderson, Charles L. Patrick, Alberta R. Patrick, Theodore G. Rossin,
Andrea R. Mihajlov, Marcia R. Petrun, and Mark Petrun,

Petitioners-Appellants,

v.

Applewood Water Association, Inc., d/b/a Applewood Estates Homeowners
Association,

Respondant-Appellee.

         ORDER REVERSED IN PART, APPEAL DISMISSED IN PART,
               AND CASE REMANDED WITH DIRECTIONS

                                     Division I
                            Opinion by JUDGE FREYRE
                          Taubman and Dailey, JJ., concur

                           Announced November 3, 2016

Herms & Herrera, LLC, David M. Herrera, Fort Collins, Colorado, for Plaintiffs-
Appellants

CYLG, P.C., Christopher S. Maciejewski, Christopher A. Young, Denver,
Colorado, for Defendant-Appellee
¶1    In this appeal from the trial court’s order denying a motion for

 preliminary injunction, plaintiffs, Mark R. Anderson, Charles L.

 Patrick, Alberta R. Patrick, Theodore G. Rossin, Andrea R. Mihajlov,

 Marcia R. Petrun, and Mark Petrun (Owners), sought to enjoin the

 defendant, Applewood Water Association, Inc., d/b/a Applewood

 Estates Homeowners Association (Association), from performing two

 acts. First, Owners sought to enjoin the Association from

 conducting special meetings of the board of directors (board) in

 violation of its bylaws, § 38-33.3-308(2.5), C.R.S. 2016, of the

 Colorado Common Interest Ownership Act (CCIOA), and § 7-128-

 203(2), C.R.S. 2016, of the Colorado Revised Nonprofit Corporations

 Act (CRNCA). Second, Owners sought to enjoin the Association

 from submitting the “Amended and Restated Declaration of

 Covenants, Conditions and Restrictions of Applewood Estates”

 (Amended Declaration) for a full membership vote based on their

 belief that the Amended Declaration illegally conveyed their

 property rights in the bridle path easement to the Association and

 illegally expanded the scope of use of the easement without their

 consent. Because, as a matter of first impression, we conclude the

 trial court could enjoin the Association from holding special board

                                   1
 meetings without providing the notice required under CCIOA and

 CRNCA, we reverse the trial court’s order as to that preliminary

 injunction request and remand for further factual findings under

 Rathke v. MacFarlane, 648 P.2d 648, 653-54 (Colo. 1982). Based

 on the information provided in supplemental briefs filed by both

 parties, we conclude the second injunction request is moot because

 a vote on the Amended Declaration has already occurred.

 Therefore, we dismiss that portion of the appeal.

                          I.       Background

¶2    This case involves a dispute between the Association and some

 individual lot owners over the board’s decision, made in special

 meetings, to retain legal counsel to draft the Amended Declaration.

 Owners contend that the board conducted these special meetings

 without giving them the required notice and an opportunity to

 provide input. They also contend that the Amended Declaration

 unlawfully expands the use of the bridal path easement beyond its

 original intended use without their consent. Because the relevant

 facts are not disputed, we provide a brief history of the covenants

 and bylaws and then summarize the hearing evidence.

                     A.        Covenants and Bylaws

                                      2
¶3      In 1964, the Applewood Estates plat map was recorded with

 the Larimer County Clerk and Recorder and stated, “All Utility &

 Bridle Path Easements Are 10’ On Each Side of Property Lines

 Unless Otherwise Noted.” This map identified the lots in the

 subdivision that were subject to the easements.

¶4      Additionally, the Association was created as a nonprofit

 corporation, and it recorded a list of protective covenants.

 Covenant 9 related to easements and stated in relevant part:

             Easements for installation of utilities, drainage
             facilities, and bridal path(s) are served as
             shown on the recorded plat.

             ...

             The easement area shall be maintained, at all
             times, by the owner of the plot appurtenant to
             it, to create a safe area for horsebackriding
             [sic].

¶5      Covenant 15 provided for amendments to the covenants by

 two-thirds approval of the association members.

¶6      The Association also created bylaws that set forth its purpose

 and rules for governance and specifically addressed special

 meetings of its members and of the board.1 These bylaws required

 1   Owners comprise a subset of the Association’s membership.

                                     3
 thirty days’ notice to all members of regular and special meetings,

 and they permitted special meetings of the board upon giving

 reasonable notice to each director. The bylaws did not require

 notice of special board meetings to association members.

¶7    In 1983, the Association amended the original covenants by a

 two-thirds member vote and added several definitions relevant here.

 The amended covenants defined “Common Area” as all real property

 owned by the Association for the common use and enjoyment of the

 members. It separately defined “Easements” as designated areas

 used by horseback riders and hikers and for utilities. It defined

 “Common Facilities” as irrigation rights managed by the

 Association, easement paths designated on the recorded plats, and

 roads.

¶8    The amended covenants further stated that every member had

 a right to the enjoyment of the common areas, common facilities,

 and easements. They continued to require that the easements be

 maintained “by the owner of the plot appurtenant to it so as to

 create a safe area for horseback riding” and expanded the use of the

 easement to include hiking. They contained the added restriction

 that “no motorized vehicles will be allowed.” The amended

                                   4
  covenants also permitted future amendment by two-thirds approval

  of the association members.

                         B.     Hearing Evidence

¶9     In 2014, the board held special meetings to discuss, among

  other things, further amending the covenants. Witnesses testified

  that the board held these special meetings without providing notice.

  They stated that they learned of these meetings from the minutes

  posted thereafter.

¶ 10   Hours before the annual meeting, the board circulated a

  proposed copy of the Amended Declaration, which purported to

  alter the scope of the easements by expanding the activities that

  could be conducted in them. A membership vote was scheduled for

  June 2015.

¶ 11   The Amended Declaration contained a new provision entitled

  “Names & Description of Property/Easements” (Article 2). As

  relevant here, this article expanded the permissible uses of the

  easement to include all nonmotorized, muscle-powered activities (in

  addition to horseback riding and hiking). The Amended Declaration

  continued to require members to maintain the bridle paths

  appurtenant to their lots, “according to the Rules and Regulations

                                     5
  set by the Board of Directors,” and continued to permit future

  amendment by two-thirds membership approval.

¶ 12   Owners learned of the special board meetings before the

  annual membership meeting scheduled in March 2015 and filed an

  action seeking declaratory relief that the board could not hold

  special meetings without proper notice, and that the easement

  could not be unilaterally altered. Contemporaneously, Owners filed

  the present action for a preliminary injunction. They asked the trial

  court to enjoin the Association from submitting the Amended

  Declaration for a vote and to enjoin the board from holding special

  meetings contrary to law, pending a decision on the merits of the

  case. Following a hearing, the court denied both requests.

                     II.    Preliminary Injunction

¶ 13   Owners make two contentions. First, they contend that the

  trial court erred as a matter of law when it found that it had no

  legal authority to enjoin future violations of civil statutes. Second,

  they contend that the court abused its discretion when it refused to

  enjoin the Association from modifying the covenants and expanding

  the use of the easement. We agree with their first contention and

                                     6
  conclude that a trial court may enjoin future violations of a civil

  statute. We find their second contention moot.

                 A.    Standard of Review and Applicable Law

¶ 14   We review a trial court’s decision to grant or deny preliminary

  injunctive relief for an abuse of discretion. Phx. Capital, Inc. v.

  Dowell, 176 P.3d 835, 840 (Colo. App. 2007). We will overturn a

  trial court’s decision on a motion for a preliminary injunction if the

  court made a legal error or the decision was manifestly arbitrary,

  unreasonable, or unfair. Sanger v. Dennis, 148 P.3d 404, 410

  (Colo. App. 2006). If only legal, rather than factual, questions are

  at issue, we review the trial court’s preliminary injunction ruling de

  novo. Gitlitz v. Bellock, 171 P.3d 1274, 1278 (Colo. App. 2007).

¶ 15   A preliminary injunction preserves the status quo or protects a

  party’s rights pending the final determination of a cause. Id. (citing

  City of Golden v. Simpson, 83 P.3d 87, 96 (Colo. 2004)). Its purpose

  is to prevent irreparable harm prior to a decision on the merits of a

  case. Id. In considering a motion for a preliminary injunction, the

  trial court must find that the moving party has demonstrated (1) a

  reasonable probability of success on the merits; (2) a danger of real,

  immediate, and irreparable injury that may be prevented by

                                      7
  injunctive relief; (3) lack of a plain, speedy, and adequate remedy at

  law; (4) no disservice to the public interest; (5) a balance of the

  equities in favor of the injunction; and (6) the injunction’s

  preservation of the status quo pending a trial on the merits. Id.

  (citing Rathke, 648 P.2d at 653-54). If each criterion is not met,

  injunctive relief should not be granted. Gitlitz, 171 P.3d at 1278.

                  B.    Enjoining Prospective Law Violations

¶ 16   The parties agree that the Association is governed by CCIOA

  and CRNCA, both of which address special board meetings;

  however, they disagree about which provisions apply. The court did

  not resolve this issue or apply the Rathke factors to the issue of

  special board meetings because it found, as a matter of law, that it

  could not enjoin future violations of civil statutes. Because we

  conclude that CCIOA and CRNCA create a legally protected interest

  in open meetings and that the trial court may enjoin violations of

  their provisions, we remand the case for the court to make factual

  findings under Rathke and to determine whether Owners have

  satisfied their burden of showing the necessity of enjoining future

  special board meetings.

                                     8
¶ 17   Resolving this issue involves our interpretation of CCIOA and

  CRNCA. Because a court’s primary duty is to give full effect to the

  General Assembly’s intent, we begin by examining the statutes’

  plain language. Bd. of Cty. Comm’rs v. Hygiene Fire Prot. Dist., 221
P.3d 1063, 1066 (Colo. 2009). We give words and phrases their

  plain and ordinary meanings and, where clear, apply the statute as

  written. The Triple Crown at Observatory Vill. Ass’n v. Vill. Homes of

  Colo., Inc., 2013 COA 150M, ¶ 10. Where two statutes address the

  same subject, we construe them together, seeking to avoid

  inconsistencies and to reconcile conflicts. Hygiene Fire Prot. Dist.,
221 P.3d at 1066.

¶ 18   Our General Assembly enacted CCIOA to encourage the

  establishment of homeowners’ associations. Platt v. Aspenwood

  Condo. Ass’n, 214 P.3d 1060, 1064 (Colo. App. 2009). “[I]t is in the

  best interests of the state and its citizens to establish a clear,

  comprehensive, and uniform framework for the creation and

  operation of common interest communities . . . .” § 38-33.3-

  102(1)(a), C.R.S. 2016. “[T]he continuation of the economic

  prosperity of Colorado is dependent upon the strengthening of

  homeowner associations in common interest communities . . . .”

                                      9
  § 38-33.3-102(1)(b). Thus, “it is the policy of this state to promote

  effective and efficient property management through defined

  operational requirements that preserve flexibility for such

  homeowner associations.” § 38-33.3-102(1)(d).

¶ 19   To this end, § 38-33.3-114(2), C.R.S. 2016, empowers courts

  to enforce CCIOA’s provisions. Id. (“Any right or obligation declared

  by this article is enforceable by judicial proceeding.”). Where not

  inconsistent with CCIOA, courts have the power to apply

  supplemental general principles of law, including the law of

  corporations and the law of equity. See § 38-33.3-108, C.R.S. 2016

  (CCIOA is supplemented by “[t]he principles of law and equity,

  including, but not limited to, the law of corporations and

  unincorporated associations, [and] the law of real property.”).

  Moreover, remedies should be “liberally administered” to ensure

  that an aggrieved party “is put in as good a position as if the other

  party had fully performed.” § 38-33.3-114(1).

¶ 20   In addition to CCIOA, § 7-123-104(2)(a), C.R.S. 2016, of

  CRNCA provides:

            (2) A nonprofit corporation’s power to act may
            be challenged:

                                    10
             (a) In a proceeding against the nonprofit
             corporation to enjoin the act. The proceeding
             may be brought by a director or by a voting
             member or voting members in a derivative
             proceeding.

¶ 21   Although no Colorado case has interpreted these specific

  statutes, we conclude that the plain language of both statutes gives

  a court the authority to enjoin the violation of their provisions

  where a movant can show noncompliance and harm.

¶ 22   This conclusion furthers the stated purposes of the statutes to

  promote effective and efficient property management and is

  consistent with cases granting injunctive relief where the loss of a

  contractually negotiated right to control is at issue. See DeJean v.

  Grosz, 2015 COA 74, ¶ 13 (the right to prevent a homeowners

  association from engaging in contested practices during the

  pendency of litigation is a proper subject of an injunction);

  K9Shrink, LLC v. Ridgewood Meadows Water & Homeowners Ass’n,

  278 P.3d 372, 379 (Colo. App. 2011) (injunctive relief was proper

  where “neighbors were irreparably harmed by plaintiffs’ continuing

  violation of the Covenant”); Gitlitz, 171 P.3d at 1280 (finding that

  the loss of a contractually negotiated right to management and

                                    11
  control of an organization creates irreparable harm for injunctive

  purposes).

¶ 23   Our construction is also consistent with C.R.C.P. 65(a), which

  empowers courts to order injunctive relief as “a preventive and

  protective remedy, affording relief against future, rather than past,

  acts.” Bd. of Cty. Comm’rs v. Pfeifer, 190 Colo. 275, 279, 546 P.2d
946, 949 (1976) (emphasis added); see also RoDa Drilling Co. v.

  Siegal, 552 F.3d 1203, 1210 (10th Cir. 2009) (A plaintiff must show

  that the harm “is likely to occur before the district court rules on

  the merits.” (quoting Greater Yellowstone Coal. v. Flowers, 321 F.3d
1250, 1260 (10th Cir. 2003))); Bd. of Cty. Comm’rs v.

  Bowen/Edwards Assocs., Inc., 830 P.2d 1045, 1054 (Colo. 1992)

  (Injunctive relief is appropriate when “the action complained of has

  caused or has threatened to cause imminent injury to an interest

  protected by law.”); Graham v. Hoyl, 157 Colo. 338, 341, 402 P.2d
604, 606 (1965) (The purpose of a preliminary injunction is to

  “prevent further harm where harm is alleged.”).

¶ 24   Accordingly, we conclude that the court had the legal

  authority to enjoin future violations of CCIOA and CRNCA. Because

  Owners presented evidence at the hearing to support their

                                    12
  contention that the board conducted special meetings without

  giving the notice set forth in CCIOA and CRNCA, and because they

  also presented evidence that those meetings concerned

  amendments to the existing covenants, we remand the case for the

  court to make factual findings under Rathke to determine whether

  Owners are entitled to injunctive relief. The court may, in its

  discretion, consider additional evidence related to special board

  meetings that has developed since the preliminary injunction

  hearing.

                             C.    Mootness

¶ 25   As noted, Owners initiated this litigation before the

  Association had submitted the Amended Declaration for a formal

  membership vote. However, that vote was scheduled to occur

  before briefing deadlines. In response to this court’s order for

  supplemental briefing on the status of the vote, the parties filed

  responses. In their responses, they stated that the vote had

  occurred, the amendments had passed by the requisite two-thirds

  vote, and that amended covenants had been recorded with the

  Larimer County Clerk and Recorder. Thus, the Association

                                    13
  contends that all issues related to the court’s refusal to enjoin a

  vote are moot. For the reasons stated below, we agree.

                         1.   Legal Framework

¶ 26   “The duty of this court, as of every other judicial tribunal, is to

  decide actual controversies by a judgment which can be carried into

  effect, and not . . . to declare principles or rules of law which cannot

  affect the matter in issue before it.” Tippett v. Johnson, 742 P.2d
314, 315 (Colo. 1987) (alteration in original) (quoting Barnes v. Dist.

  Court, 199 Colo. 310, 312, 607 P.2d 1008, 1009 (1980)). Thus,

  appellate courts ordinarily will not “render opinions on the merits of

  an appeal when the issues have become moot.” Johnson v. Griffin,

  240 P.3d 404, 406 (Colo. App. 2009). “An issue becomes moot

  when the relief granted by the court would not have a practical

  effect upon an existing controversy.” Trinidad Sch. Dist. No. 1 v.

  Lopez, 963 P.2d 1095, 1102 (Colo. 1998).

¶ 27   The mootness doctrine, however, does not always bar judicial

  review of moot issues. Id. Two exceptions to the mootness doctrine

  permit courts to consider the merits of an otherwise moot matter:

  (1) when the matter involves an issue that is capable of repetition,

  yet evading review; or (2) when the matter involves a question of

                                    14
  great public importance or recurring constitutional violations.

  People in Interest of Ofengand, 183 P.3d 688, 691 (Colo. App. 2008);

  Gresh v. Balink, 148 P.3d 419, 422 (Colo. App. 2006).

¶ 28   Issues are capable of repetition when they could, or are likely

  to, reoccur in the future. Ofengand, 183 P.3d at 692 (issue capable

  of repetition because it was “likely” to reoccur); see also Tesmer v.

  Colo. High Sch. Activities Ass’n, 140 P.3d 249, 252 (Colo. App. 2006)

  (finding issue capable of repetition because other students “could”

  make similar claims in the future). Issues “evad[e] review” when the

  “time required to complete the legal process will necessarily render

  each specific challenge moot.” Rocky Mountain Ass’n of Credit

  Mgmt. v. Dist. Court, 193 Colo. 344, 345-46, 565 P.2d 1345, 1346

  (1977) (citation omitted).

                               2.   Analysis

¶ 29   Owners contend that the voting issue is capable of repetition

  yet evading review because the board can propose amendments

  through special meetings without notice and then submit those

  changes for a membership vote. The Association contends any

  issues related to the vote are moot because the vote has already

  occurred. Neither party asserts that this issue is one of great

                                     15
  importance or involves a recurring constitutional violation; thus, we

  do not address this exception. State Bd. of Chiropractic Exam’rs v.

  Stjernholm, 935 P.2d 959, 971 (Colo. 1997).

¶ 30   Owners sought an injunction to prevent a vote that they

  believed would lead to an unlawful result — a unilateral change in

  an easement on their property. Because a vote has occurred, the

  covenants now reflect the easement use changes — the underlying

  issue in this case. Thus, the Association’s authority to change

  easement ownership rights by a vote is not capable of repetition in

  this case and can now be reviewed on the merits. While this issue

  may be capable of repetition in other cases and between other

  parties, the issue will not evade review because the “result” of the

  vote (here the legality of the easement use change) will be the

  subject of the action giving rise to the injunction request.

  Accordingly, we conclude that the issue is not capable of repetition

  but evading review.

¶ 31   A claim is moot when prospective relief is unnecessary to

  remedy an existing controversy or prevent its reoccurrence. Id. The

  vote has occurred and no uncertainty remains about whether the

  Association can obtain a two-thirds majority vote to change the

                                    16
  easement. Thus, we conclude that deciding whether the district

  court erred when it denied injunctive relief because the alleged

  irreparable injury was speculative “would not have a practical effect

  upon an existing controversy.” Trinidad, 963 P.2d at 1102. As

  acknowledged by Owners, the issue of harm is now squarely before

  the district court for review. Accordingly, we conclude that no

  exception to the mootness doctrine applies concerning the

  membership vote, and we dismiss this portion of the appeal.

                          III.    Conclusion

¶ 32   We reverse the court’s finding that it lacked the authority to

  enjoin future violations of civil statutes, and remand the case for

  further factual findings. We direct the court to apply the factors set

  forth in Rathke to the evidence including, in its discretion, any

  additional evidence related to special board meetings that has

  developed since the preliminary injunction hearing, and to

  determine whether injunctive relief related to those meetings is

  warranted. We dismiss the remaining claims as moot.

       JUDGE TAUBMAN and JUDGE DAILEY concur.

                                    17