Court Opinion

ID: 4706655
Source: CourtListenerOpinion
Date Created: 2021-07-27 04:08:42.840519+00
Date Added: 2024-06-11T08:06:38.529190
License: Public Domain

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                    IN THE SUPREME COURT OF THE STATE OF WASHINGTON

               CAROLYN ROBBS BILANKO, an                   )
               individual,                                 )     No. 91247-5
                                                           )
                                 Respondent,               )
                                                           )
                     v.                                    )      EnBanc
                                                           )
               BARCLAY COURT OWNERS                        )
               ASSOCIATION, a Washington non-profit        )
               Corporation,                                )      Filed   APR 2 8 2016
                                                           )
                                  Appellant.               )
               ___________________________ )

                     GoNZALEz, J.-The Barclay Court Owners Association amended its

               condominium declaration to restrict the number of units that could be leased

               at one time. After this amendment was passed and recorded, Carolyn

               Bilanko purchased a condo at Barclay Court. Four years later, Bilanko

               challenged the amendment as improperly passed. We must decide whether

               Bilanko's challenge is timely under the Washington Condominium Act

               (WCA), chapter 64.34 RCW. We hold that it is not timely and reverse.
                                                
               Bilanko v. Barclay Court Owners Ass 'n, No. 91247-5

                                                  BACKGROUND

                      Barclay Court is a condominium owners' association for a 28-unit

               residential condominium development in Seattle, Washington. Barclay

               Court was organized under the WCA, chapter 64.34 RCW, 1 and recorded its

               residential condominium declaration (Declaration) on May 2, 2001. Section

               9.2 of the 2001 Declaration stated that there was "no restriction on the right

               of any [o]wner to lease or otherwise rent its [u]nit." Clerk's Papers (CP) at

               111.

                      Seven years later, Barclay Court amended its Declaration to limit

               leasing with the stated intent of "preserving and enhancing the value of the

               Condominium and of the individual units." Id. at 204, 206. This

               amendment, "Amendment No. 1," provided that only seven units could be

               leased at any time. Under the Declaration, the "imposition of any

               restrictions on leasing of [u]nits" required only a 67 percent vote to pass. Id.

               at 194. 2 However, any changes to the "uses to which any [u]nit is restricted"

               required a 90 percent vote to pass. Id. at 194. The Declaration does not

               define the term "use," and it is not immediately apparent which vote total

               1
                 The Washington Condominium Act governs condominium complexes created after July
               1, 1990. Filmore LLLP v. Unit Owners Ass 'n of Centre Pointe Condo., 184 Wn.2d 170,
               171-72,355 P.3d 1128 (2015) (citing Shorewood W. Condo. Ass'n v. Sadri, 140 Wn.2d
               47, 52, 992 P.2d 1008 (2000)).
               2
                 Section 5.5 of the Declaration indicates voting is allocated equally to each unit, with
               each unit entitled to one vote.
                                                           2
                                                     
               Bilanko v. Barclay Court Owners Ass'n, No. 91247-5

               was needed to approve the amendment. 3 We do know that the amendment

               received at least 67 percent of the vote on October 27, 2008. 4 The

               association treated the amendment as effective. It was properly recorded on

               November 3, 2008.

                      A year later, Bilanko purchased a two-bedroom unit in Barclay Court.

               Her recorded statutory warranty deed indicated the property was subject to

               Barclay Court's Declaration and Amendment No. 1. At some point, Bilanko

               decided she wanted to lease her unit. Unfortunately, seven units were

               already being leased at the time. In March 2013, Bilanko asked to be put on

               the leasing waiting list. She was number five on the waiting list. In

               September 2013, Bilanko requested a hardship waiver under section 9.2.6.5

               of the amendment to allow her to lease her unit. Barclay Court denied

               Bilanko's request. Bilanko persisted. She notified Barclay Court in October

               2013 that she intended to lease her unit beginning in November and would

               sue unless Barclay Court revised Amendment No. 1. Counsel for Barclay

               Court responded that Bilanko would violate the Declaration if she leased out

               3
                 We are aware of the recurring, unsettled question of whether the definition of "use" in
               the WCA includes the leasing or renting of a unit. The legislature may well wish to
               clarify the WCA on this point.
               4
                 While the exact vote count is not in the record before us, the amendment, as signed by
               the President of Barclay Court, states it passed with at least 67 percent of the vote.
                                                            3
                                         
              Bilanko v. Barclay Court Owners Ass 'n, No. 91247-5

               her unit and that Barclay Court had the right to evict any unauthorized

               tenants.

                     Bilanko sued Barclay Court on July 14, 2014, alleging that the leasing

               amendment was invalid because it had not received sufficient votes to

               change the "uses to which any [u]nit is restricted" under RCW 64.34.264

               and the Declaration. CP at 1-7. Barclay Court moved for partial summary

               judgment, arguing that Bilanko's action was barred by the one-year statute

               of limitations under RCW 64.34.264(2) and an identical one-year limit in the

               Declaration. Bilanko moved for declaratory relief, arguing that the

               amendment was not correctly adopted, that it was void ab initio, and that her

               challenge was not barred by the statute of limitations. The trial court judge

               initially granted Barclay Court's motion and denied Bilanko's. It found that

               although Bilanko would have prevailed on the merits had she filed a timely

               challenge, the statute of limitations under RCW 64.34.264(2) barred her

               claim. Shortly afterward, the trial judge stayed its order and certified the

               case for interlocutory review under RAP 2.3(b )(4).

                      Meanwhile, Division Three of the Court of Appeals held that a

               challenge to an amendment that was not properly passed under the WCA is

               not barred by the one-year limitation in RCW 64.34.264(2). Club Envy of

               Spokane, LLC v. Ridpath Tower Condo. Ass 'n, 184 Wn. App. 593, 601, 337

                                                         4
                                       
              Bilanko v. Barclay Court Owners Ass 'n, No. 91247-5

               P.3d 1131 (2014). After the Club Envy decision, Bilanko moved the trial

               court to vacate its previous orders and enter judgment for her. Based on

               Club Envy, the trial court granted her motion, declared Barclay Court's

               amendment invalid, and entered summary judgment for Bilanko. The

               parties stipulated to dismissal of the remaining claims without prejudice

               under CR 41(a)(l)(A) to facilitate review.

                     Barclay Court timely sought direct review in this court under RAP

               4.2(a)(4) as a fundamental and urgent issue of broad public importance. We

               granted review.

                                                   ANALYSIS

                     Barclay Court argues that Bilanko's challenge to Amendment No. 1 is

               time barred under RCW 64.34.264(2). We agree. Under a plain reading of

               the statute, a challenge to an allegedly invalid amendment cannot be brought

               more than one year after the amendment is recorded. Unlike in Club Envy,

               equity does not demand the time limit for this challenge be tolled.

                     Whether a claim is time barred is a legal question we review de novo.

               Goodman v. Goodman, 128 Wn.2d 366, 373, 907 P.2d 290 (1995). RCW

               64.34.264(2) provides that "[n]o action to challenge the validity of an

               amendment adopted by the association pursuant to this section may be

               brought more than one year after the amendment is recorded." Section 25.1

                                                         5
                                                    
               Bilanko v. Barclay Court Owners Ass 'n, No. 91247-5

               of the Declaration contains nearly identical language as the WCA barring

               challenges more than one year after the recording of an amendment.

                         The plain language ofRCW 64.34.264(2) bars challenges to the

               validity of an amendment brought more than one year after recording the

               amendment. 5 Since the statute does not define "validity," we look to a

               dictionary to determine its ordinary meaning. State v. Gonzalez, 168 Wn.2d

               256, 263, 226 P .3d 131 (20 10) (citing Estate ofHaselwood v. Bremerton Ice

               Arena, Inc., 166 Wn.2d 489, 498, 210 P.3d 308 (2009)). "Valid" is defined

               as "[l]egally sufficient; binding." BLACK'S LAW DICTIONARY 1784 (10th ed.

               2009). This time bar, then, is intended to prevent challenges to whether an

               amendment is legally sufficient or binding that are brought more than a year

               after recording the amendment.

                         Here, Bilanko is challenging the legal sufficiency of the amendment.

               She argues that the amendment is "invalid because it did not receive the

               level of owner approval required under the WCA." Resp't Bilanko's

               Appellate Br. at 10. Under RCW 64.34.264(2), Bilanko had one year from

                   5
                The parties dispute whether this time bar operates as a statute of limitations or a statute
               of repose. A statute of limitation bars a plaintiff from bringing an already accmed claim
               after a specific period of time has passed; a statute of repose, however, terminates a right
               of action after a specified time, even if an injury has not yet occurred. 1000 Virginia Ltd.
               P'ship v. Vertecs Corp., 158 Wn.2d 566, 574-75, 146 P.3d 423 (2006) (quoting Rice v.
               Dow Chern. Co., 124 Wn.2d 205, 211-12, 875 P.2d 1213 (1994)). We need not decide
               between the two as the result is the same in this case.
                                                            6
                                       
               Bilanko v. Barclay Court Owners Ass 'n, No. 91247-5

               November 3, 2008, when Barclay Court recorded the amendment, to bring

               her challenge. Bilanko did not challenge the validity of the amendment until

               2014. Bilanko 's challenge is time barred under the plain language of RCW

               64.34.264(2).

                      Relying on Club Envy, Bilanko argues that the time bar only applies

               to amendments that were passed "pursuant to," or "in compliance with" the

               requirements ofRCW 64.34.264. Resp't Bilanko's Appellate Br. at 31

               (citing Club Envy, 184 Wn. App. at 593). Adopting her approach would

               require us to consider the merits of a challenge before determining whether

               the time bar applies-an approach we are reluctant to adopt in this case. In

               contrast, it is easy to see why the court took that approach in Club Envy.

               There, the unit owners alleged the condo association president, who had

               been convicted of fraud in unrelated cases at the time of summary judgment,

               had fraudulently filed amendments decreasing the allocated interests of each

               unit owner. Club Envy, 184 Wn. App. at 597-98. Nothing in the opinion

               suggests that any vote was held, and the unit owners were not aware of the

               amendment until after the amendment was recorded. !d. at 602. While not

               specifically reaching (but hinting strongly) whether in fact the amendments

               had been fraudulently filed, the Court of Appeals held that a challenge to the

               "validity of the amendment as not being properly passed by the association

                                                          7
                                                    
               Bilanko v. Barclay Court Owners Ass'n, No. 91247-5

               pursuant to the WCA is not barred by RCW 64.34.264(2)'s one-year

               limitation." Id. at 601.

                      Club Envy dealt with a strikingly different issue than what is present

               in this case. There, it appears the condo association president committed

               fraud by recording an amendment that he did not have the legal authority to

               record without the consent of any of the other unit owners. The court

               concluded the amendment was void ab initio, 6 or "void from its inception."

               Club Envy, 184 Wn. App. at 600-01. Actions that exceed the decision

               maker's authority are generally void. See, e.g., S. Tacoma Way, LLC v.

               State, 169 Wn.2d 118, 123, 233 P.3d 871 (2010) (indicating that a

               government contract is void only where the government entity "had no

               authority to enter the contract in the first place"); see In re Pers. Restraint of

               Thompson, 141 Wn.2d 712,719-23, 10 P.3d 380 (2000) (holding judgment

               and sentence invalid where court had no authority to convict defendant of a

               nonexistent crime); cf In re Disciplinary Proceeding Against

               Hammermaster, 139 Wn.2d 211, 219, 985 P.2d 924 (1999) (discussing

               municipal judge's lack of authority to impose unauthorized sentences).

               These types of challenges can generally be made outside of a statutory time

               6
                 An agreement or contract is "void ab initio" if it "seriously offends law or public policy,
               in contrast to a contract that is merely voidable at the election of one party to the
               contract." BLACK'S, supra, 1805 (lOth ed. 2009).
                                                             8
                                          
              Bilanko v. Barclay Court Owners Ass 'n, No. 91247-5

               bar. Club Envy, 184 Wn. App. at 601; accordS. Tacoma Way, 169 Wn.2d at

               124 ("If the transaction was truly void, as our cases recognize, it would be

               subject to challenge and invalidation at any time, perhaps years later."); see

               also Allstate Ins. Co. v. Khani, 75 Wn. App. 317, 323-24, 877 P.2d 724

               (1994) ("Void judgments may be vacated regardless of the lapse of time."

               (citing In reMarriage ofLeslie, 112 Wn.2d 612, 618-19, 772 P.2d 1013

               (1989))).

                     In essence, Bilanko asks us to hold that any legal error committed by a

               condominium association that changes a declaration renders the change void

               and challenges exempt from the WCA time bar. It is true that condominium

               associations are organized as corporations, and corporations must act in

               accordance with any formalities "prescribed by its charter, or by the general

               law." Twisp Mining & Smelting Co. v. Chelan Mining Co., 16 Wn.2d 264,

               294, 133 P.2d 300 (1943); RCW 64.34.300. It is also true that when a

               corporation acts beyond its corporate powers or its actions offend public

               policy, those actions are void. Twisp, 16 Wn.2d at 293-94. But if a

               corporation fails to observe some statutory requirement while acting within

               its corporate powers, the act is "voidable only, and is valid until avoided, not

               void until validated." Id. at 294 (quoting 19 C.J.S. Corporations§ 968

               (1940)). Actions that fail to comply with statutory requirements are

                                                         9
                                        
               Bilanko v. Barclay Court Owners Ass 'n, No. 91247-5

               generally not void unless the legislature has authorized such a penalty. See

               Way v. Pac. Lumber & Timber Co., 74 Wash. 332, 333, 133 P. 595 (1913)

               (articulating rule that "a contract which violates a statutory regulation of

               business is not void unless made so by the terms of the act"); see also

               Yakima Lodge No. 53 v. Schnieder, 173 Wash. 639, 642-43,24 P.2d 103

               ( 193 3) ("The ordinance did not provide that contracts made in violation

               thereof should be void."); accord Allison v. Medicab Int'l, Inc., 92 Wn.2d

               199, 203, 597 P.2d 380 (1979) (noting failure to comply with statutory

               requirements to register franchise did not render franchise agreement void).

                      In this case, however, there is nothing in the record to suggest that

               Barclay Court committed fraud, seriously offended public policy, or

               exceeded its legal authority in passing the amendment. Accordingly, the

               amendment is not void ab initio. Barclay Court followed the procedures set

               out in article 25 of its Declaration: a majority of the board of directors voted

               to submit the amendment for owner approval, all owners were notified of the

               proposed amendment in writing, and at least 67 percent of the owners

               approved the amendment. Barclay Court acted within the statutory authority

               it has under RCW 64.34.264(5) to prepare, execute, record, and certify the

               amendment. Nothing in RCW 64.34.264 suggests that the legislature

               intended to make amendments not passed with the required supermajority

                                                         10
                                               
               Bilanko v. Barclay Court Owners Ass'n, No. 91247-5

               void and subject to challenge at any time. It strains credulity to believe that

               it would not make such a draconian consequence explicit in the statute.

                         We need not decide what vote threshold was necessary to enact

               Amendment No. 1. Regardless of the percent required to pass the

               amendment, it was, at most, voidable. Challenges to voidable amendments

               must be made within the one-year time bar set out in RCW 64.34.264(2). To

               hold otherwise would render the time bar meaningless, for unit owners could

               challenge amendments years after passage. A statutory time bar is a

               "'legislative declaration of public policy which the courts can do no less

               than respect,"' with rare equitable exceptions. Cost Mgmt. Servs., Inc. v.

               City ofLakewood, 178 Wn.2d 635, 651, 310 P.3d 804 (2013) (quoting J.M

               Arthur & Co. v. Burke, 83 Wn. 690, 693, 145 P. 974 (1915)); Millay v. Cam,

                   135 Wn.2d 193,206,955 P.2d 791 (1998) (discussing predicates for

               equitable tolling of statutory time limits).

                         Unlike in Club Envy, where it appears the amendments were

               fraudulently filed, no grounds for equitable tolling appear here. Bilanko

               purchased her condo with Barclay Court over a year after the amendment

                   had been voted on by the unit owners, passed, and recorded. She was on

                   constructive, if not actual, notice at the time of purchase that her condo unit

                                                          11
                                                      
               Bilanko v. Barclay Court Owners Ass 'n, No. 91247-5

               was subject to a leasing restriction. 7 Bilanko did not have to purchase a

               condo subject to a leasing restriction. As the Declaration does not impose

               any restraints on alienation, Bilanko is free to sell her unit at any time.

                         Accordingly, we hold that Bilanko's challenge to the amendment is

               time barred under RCW 64.34.264(2). 8

                                                       CONCLUSION

                         We hold that Bilanko' s challenge to the declaration amendment is

               barred by the one-year limitation under RCW 64.34.264(2). We reverse the

               trial court's summary judgment ruling in favor of Bilanko and remand the

               case back to the trial court for further proceedings consistent with our

               opmwn.

               7
                     Washington Practice is instmctive on this point: "Obviously the purchaser of a
                   condominium unit should review in detail the existing use restrictions .... The
                   investigation is an important one for the purchaser, but it is mainly a practical and
                   personal, and not a legal, problem." 18 WILLIAM B. STOEBUCK.AND JOHN W. WEAVER,
                   WASHINGTON PRACTICE: REAL ESTATE§ 12.10, at 53 (2d ed. 2004).
                   8
                     RCW 64.34.455 grants courts the discretion to award attorney fees to the "prevailing
                   party." Barclay Court is the prevailing party, and we therefore award them reasonable
                   attorney fees under RAP 18 .1.
                                                              12
                                    
              Bilanko v. Barclay Court Owners Ass'n, No. 91247-5

              WE CONCUR:

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                                                       13