Francis v. Aspen Mountain Condominium Ass'n, Inc , 401 P.3d 125 ( 2017 )

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.
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¶ 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
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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
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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
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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
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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
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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
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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 —
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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,
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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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