Court Opinion

ID: 4020490
Source: CourtListenerOpinion
Date Created: 2016-08-01 20:17:32.678274+00
Date Added: 2024-06-11T14:30:19.904625
License: Public Domain

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

ROBERT WILBUR and DUSTIN                        No. 73725-2-1
FREDERICK,
                                                DIVISION ONE
                      Plaintiffs,

       v.                                       UNPUBLISHED OPINION

ADMIRAL'S COVE BEACH CLUB,
a Washington non-profit corporation;            FILED: August 1,2016
and JEAN SALLS, MARIA
CHAMBERLAIN, KAREN SHAAK,
ROBERT PEETZ, ELSA PALMER,
ED DELAHANTY and DAN
JONES, individuals,

                      Defendants,

SUE CORLISS,

                      Appellant,

DUSTIN FREDERICK, ROBERT
WILBUR, ADMIRAL'S COVE
BEACH CLUB, a Washington
non-profit corporation, and its
BOARD OF DIRECTORS,

                      Respondents.

       Leach, J. — In this dispute regarding interpretation of a nonprofit corporation's

governing documents, intervenor Susan Corliss appeals from an order granting partial

summary judgment and a declaratory judgment in favor of Robert Wilbur.          Because

Wilbur failed to establish that he was entitled to such a judgment as a matter of law, we

reverse and remand for further proceedings.
No. 73725-2-1 / 2

                                          FACTS

      The Plat of Admiral's Cove, Divisions 1 through 7, is located on Whidbey Island.

Owners of lots within the plat are eligible for membership in the Admiral's Cove Beach

Club (Club), a nonprofit corporation.      Incorporated in 1969, the Club governs the

development.     Club members enjoy the use of Club-owned recreational facilities,

including an outdoor Olympic-sized pool with views of Puget Sound and the Olympic

Mountains. The Club owns other recreational assets: a large waterfront beach area,

fire pit and picnic area, volleyball and basketball courts, and a playground.

      A Board of Directors (Board), elected by the members at the Club's annual

membership meeting, manages the Club's day-to-day operations. The Board levies

annual dues and is authorized to propose "special assessments" for unexpected costs

or maintenance "at any time." A simple majority vote is required to impose special

assessments on Club members. Club members vote by mail-in ballot.

       Article V of the Club's articles of incorporation state its "purposes, objects and

powers." Pertinent to this lawsuit, these include the power:

               1. To construct, install, maintain and/or own and operate athletic
       and recreational facilities of all types and kinds for the benefit of the
       members.

             4. To purchase, take, receive, lease, take by gift, devise or
       bequest, or otherwise acquire, own, hold, improve, use and otherwise deal
       in and with real or personal property ....
             5. To sell, convey, mortgage, pledge, lease, exchange, transfer
       and otherwise dispose of all or any part of the property and assets.
No. 73725-2-1 / 3

      The articles of incorporation make no specific reference to a pool, but the Club's

bylaws do. The Club's bylaws list two objectives: to "[pjrovide and operate recreational

facilities for the benefit of the members" and to "procure, maintain, operate, and protect

the recreational (and associated safety) concerns of the members of the community."

The bylaws also establish six standing committees. Two are devoted to the pool. The

Pool Operations and Safety Committee "set[s] policies for operation of the club

swimming pool, and establishes] and enforce[s] safety rules and procedures." The

Pool Maintenance and Improvement Committee is responsible for "maintenance of the

Club Swimming Pool and the operating machinery, the buildings housing the pool

equipment, rest rooms, office and fence enclosing the pool complex, pool supplies,

heating, lighting, etc." and "shall obtain estimates as necessary for accomplishing such

maintenance."

       Over time, the pool fell into a state of disrepair. By 2012, it was largely unusable.

At the Club's October 2012 annual meeting, the members unanimously passed the

following motion:

              By November 10, 2012, Pool Planning by members of the
              Pool Maintenance, Long Range Planning and Budget
              Committees will work with a nonresident facilitator, as an ex-
              officio team member and may consult with legal counsel as
              warranted . . . .

              Under the overall objective of having the pool open as soon
              as a funding and construction schedule allow, the committees
              shall have three (3) tasks to complete by February 28, 2013,
              or sooner:
No. 73725-2-1 / 4

                    (1) To identify and evaluate various options related to
                    the pool's future, including but not limited to needed
                    equipment, a permanent pool cover, and repairs to the
                    pool and its building, foundation, plumbing, and
                    electrical system, and to recommend the best cost and
                    timing options. A basic and simple plan to identify
                    projects for contractor bidding shall be developed to
                    guide these efforts; the plan shall also recommend an
                    implementation schedule for ADA [Americans with
                    Disability Act] compliance from both a financial and
                    legal standpoint.

                    (2) Investigate and develop payment options related to
                    assessment costs and dues under task one and to
                    select the approach that produces the best balance
                    between recreational benefits and costs to members.
                    The assessment total will be offset by the amount of
                    donations accumulated for that purpose.

                    (3) Upon completion of tasks 1 and 2, the committees
                    shall submit the findings to the Board and subsequently
                    work with Board as appropriate.

       Over the next several months, committee members held meetings and gathered

cost estimates. A consultant's inspection revealed widespread problems with the pool

and pool buildings, and the consultant recommended significant renovations at a cost of
approximately $650,000. The committee presented this information to the Board.
       In May 2013, the Board sent a ballot to all Club members for a vote about the

pool's future. The ballot presented two choices: (1) "refurbish, remodel and update the
pool," requiring a special assessment of approximately $650,000, or (2) "remove the
pool," requiring a special assessment of approximately $200,000. The Board included a
two-page "Frequently Asked Questions" document explaining various options and

                                          -4-
No. 73725-2-1 / 5

issues related to the vote. In a relatively close vote, a majority of Club members voted

to remove the pool instead of refurbish it.

       In September 2013, Robert Wilbur, a "pro-pool" Club member, filed a lawsuit

against the Club seeking a declaration that (1) the May 2013 vote was invalid because it

was inconsistent with the October 2012 motion and (2) the Club's articles of

incorporation and bylaws did not permit the Board to remove or decommission the pool.

Wilbur also sought an injunction restraining the Club from taking any action to remove

the pool.

       Wilbur moved for summary judgment. The Club took "no position" on the motion

and asked the trial court to issue a declaratory ruling clarifying its legal responsibilities

regarding the pool.1 Corliss, an "anti-pool" Club member, intervened and filed a cross

motion for dismissal of Wilbur's complaint.

       The trial court granted partial summary judgment in favor of Wilbur and issued

the following declaratory judgment:

              1.     The Admiral's Cove Beach Club ("ACBC") swimming
                     pool and related facilities are among the athletic and
                     recreational facilities contemplated under Article V of
                     the Articles of Incorporation of ACBC which provides
                     that the purpose of ACBC is "[t]o construct, install,
                     maintain and/or own and operate athletic and
                     recreational facilities of all types and kinds for the
                     benefits of the members."

    1After Wilbur filed his complaint but prior to the summary judgment hearing, Club
members held their annual elections and replaced several "anti-pool" directors with "pro-
pool" candidates.
                                              -5-
No. 73725-2-1/6

            2.    ACBC and its Board of Directors must adhere to the
                  requirements and directives set forth in the motion that
                  was made and approved at the Defendant's annual
                  membership meeting on October 27, 2012, unless said
                  motion is property repealed or amended to remove the
                  duties of the Board of Directors and ACBC, which
                  duties are presently embodied in this motion. That
                  particular motion, as approved, does not contain
                  language that could be construed to permit the
                  demolition or decommissioning of the swimming pool or
                  related facilities as an option for the membership's
                  future consideration.

            3.    The prior Board's action to present a ballot to the
                  membership with the option to decommission the pool
                  was contrary to the October 27, 2012, motion. It was
                  therefore invalid and of no force and effect.

            6.    In consideration of the applicable provisions of the
                  Articles of Incorporation and Bylaws, the context in
                  which they were promulgated, the circumstances
                  surrounding their promulgation, and the other rules for
                  their interpretation, the general power to dispose of
                  property as set forth in the Articles of Incorporation and
                  Bylaws governing ACBC, does not provide authority to
                  the Board to dispose of the ACBC swimming pool and
                  related facilities.

            7.    Any vote on a motion or other action item submitted to
                  the membership at a regular or special meeting of the
                  membership that would result in the demolition or
                  decommissioning of the ACBC swimming pool, would
                  be invalid and of no effect unless the governing
                  documents of ACBC were first properly amended or
                  changed to allow such action.

            8.    Under     the    governing    documents    as   presently
                  constituted, the members of the Board of Directors of
                  ACBC have a legal duty and fiduciary obligation:

                  a.      to maintain, repair and operate the swimming
                          pool and its related facilities in a reasonable
                          manner and as may be required by local, state
                                          -6-
No. 73725-2-1 / 7

                            and federal law and the governing documents
                            themselves; and

                     b.     to take affirmative action, consistent with the
                            governing documents of Admiral's Cove Beach
                            Club, to budget for and raise funds through
                            properly authorized dues and assessments to
                            carry out these duties.

              9.     The Board's duties in this regard include sufficient
                     budgeting and funding decisions that will allow for the
                     future and continued operation and maintenance of the
                     swimming pool and related facilities.

The trial court denied Wilbur's request for injunctive relief. Corliss appeals.2

                                        ANALYSIS

I.     Necessary Parties

       As a preliminary matter, we address Corliss's claim that the trial court lacked the

authority to enter a declaratory judgment because Wilbur failed to join all Club members

as necessary parties. Corliss relies on RCW 7.24.110. This statute requires that

"[w]hen declaratory relief is sought, all persons shall be made parties who have or claim

any interest which would be affected by the declaration, and no declaration shall

prejudice the rights of persons not parties to the proceeding." A "necessary party" for a

       2 In her assignments of error, Corliss challenges the grant of partial summary
judgment in favor of Wilbur and the denial of her motion for summary judgment
dismissal.   However, the trial court did not deny Corliss's motion.        Corliss failed to
renote her motion following a request for a continuance, and it was not properly before
the trial court at the time of the hearing. Instead, the trial court declined to rule on
Corliss's cross motion as moot.
                                             -7-
No. 73725-2-1 / 8

declaratory judgment action is one "whose ability to protect its interest in the subject

matter of the litigation would be impeded by a judgment."3

      We disagree with Corliss. There are only two positions in this case: that the Club

has the authority to remove the pool or that it does not. Both positions are adequately

represented by the parties to the case. The joinder of additional Club members as

parties was not necessary to resolve this controversy.

II.    Summary Judgment

      We review the grant of summary judgment de novo.4 Summary judgment is

appropriate only if the moving party is entitled to judgment as a matter of law.5 We

interpret the governing documents of a corporation in accordance with accepted rules of

contract interpretation.6 We give the words in a contract their plain, ordinary meaning

unless the contract as a whole clearly demonstrates a contrary intent.7 Articles of

incorporation and bylaws are "'correlated documents'" that are construed together.8

"'[S]ummary judgment is proper if the parties' written contract, viewed in light of the

parties' other objective manifestations, has only one reasonable meaning.'"9

       3 Primark, Inc. v. Burien Gardens Assocs., 63 Wash. App. 900, 907, 823 P.2d 1116
(1992).
       4 Keck v. Collins, 184 Wash. 2d 358, 370, 357 P.3d 1080 (2015).
       5 CR 56(c).
      6 Roats v. Blakelv Island Maint. Comm'n. Inc., 169 Wash. App. 263, 273-74, 279
P.3d 943 (2012).
      7 4105 1st Ave. S. Invs.. LLC v. Green Depot WA Pac. Coast, LLC, 179 Wash. App.
777, 784, 321 P.3d 254, review denied, 181 Wash. 2d 1004 (2014).
       8 Roats. 169 Wash. App. at 274 (quoting Rodruck v. Sand Point Maint. Comm'n, 48
Wash. 2d 565, 577, 295 P.2d 714 (1956)).
       9 Go2Net, Inc. v. C I Host. Inc.. 115 Wash. App. 73, 85, 60 P.3d 1245 (2003)
(quoting Hall v. Custom Craft Fixtures, Inc.. 87 Wash. App. 1, 9, 937 P.2d 1143 (1997)).
                                           -8-
No. 73725-2-1 / 9

        First, we consider if the Board had the authority to present Club members with

the option of voting to remove the pool. We conclude that it did.

        The October 2012 motion required the establishment of a committee to identify

needed repairs, investigate costs, and submit this information to the Board. Wilbur does

not dispute that the committee performed its assigned task. Instead, Wilbur contends

the Board ignored the committee's findings and presented the Club's members with the

option to remove the pool, a choice not contemplated by the motion. He argues that

this option is inconsistent with the motion's stated objective of "having the pool open as

soon as a funding and construction schedule allow." But the October 2012 motion

governed only the actions of the committee. It did not impose any duties or constraints

on the Board. And the Club's bylaws permit the Board to present special assessments

to the members for a vote "at any time," regardless of whether they have been approved

by motion. As a matter of law, Wilbur fails to establish the invalidity of the May 2013

vote.

        Corliss also asserts that the Club has the authority, pursuant to its governing

documents, to remove the pool at any time. We agree.

        The articles of incorporation expressly give the Club the power to "sell, convey,

mortgage, pledge, lease, exchange, transfer and otherwise dispose of all or any part of

the property and assets."10 "Dispose of is defined as "to transfer into new hands or to

       10 This language is identical to that found in RCW 24.03.035(5), which provides
that any nonprofit corporation has the power to "sell, convey, mortgage, pledge, lease,
exchange, transfer and otherwise dispose of all or any part of its property and assets."
                                            -9-
No. 73725-2-1/10

the control of someone else (as by selling or bargaining away)... to get rid of: throw

away: discard ... to treat or handle (something) with the result of finishing or finishing
with."11 Thus, a plain reading of the Club's governing documents demonstrates the

Club has the broad authority to remove or decommission any of its "property and

assets."

        Wilbur argues that the words "property" and "assets" are general terms that do

not include the pool. Instead, Wilbur contends, the pool is an "athletic and recreational

facility" which the articles of incorporation require to be "maintained and operated." We

find this interpretation strained. First, the articles of incorporation state that the Club

may dispose of "all or any part" of the property. This phrase states that anything the
Club owns is subject to disposal. The articles of incorporation do not mention the pool

by name or specifically exempt the pool from disposal. Second, the use of the phrase

"property and assets" elsewhere in the bylaws shows an intent that these words include

the pool. For example, article III, section 7 of the bylaws, which provides that Club

membership is appurtenant to ownership of property in Admiral's Cove, states that "no

member whose membership is transferred [through sale or devise of the property] shall

be entitled to share or participate in any of the property or assets of the Club."

(Emphasis added.) This clearly indicates that if a Club member ceases to belong to the

Club, he or she loses the benefits of Club membership, including use of the swimming

pool.

        11 Webster's Third New International Dictionary 654 (2002).
                                            -10-
No. 73725-2-1 /11

      Wilbur argues that because the bylaws establish two committees devoted to

pool-related issues, this shows a strong intent to maintain and operate the pool. But the

existence of these committees does not guarantee or compel the perpetual presence of

a pool.12 For example, the bylaws also establish a Grounds and Building Committee,

which is responsible for maintenance of and improvements to the Club's grounds,

including "playfields, playground equipment, the shelter and stoves, picnic tables, flower

beds, etc."   But this does not mean that the Club lacks the authority to get rid of a

broken swing set or a dilapidated picnic shelter.

      We conclude that the Club's current governing documents give it the power to

remove or decommission the pool. We also conclude that the October 2012 motion did

not prohibit the Club from allowing the members to vote whether to remove the pool.

Accordingly, we reverse and remand for further proceedings consistent with this

opinion.

WE CONCUR:

                                                         -tcft^i^.
                                                               ^U X                ^r

        12 We note that while Wilbur argued below that he possessed a property interest
in the pool, he expressly abandons this claim on appeal.
                                           -11-