No. 51594-2-I.The Court of Appeals of Washington, Division One.
Filed: November 17, 2003. DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION
Appeal from Superior Court of Island County. Docket No: 02-2-00305-7. Judgment or order under review. Date filed: 12/13/2002.
Counsel for Appellant(s), Joseph L. Broadbent, Attorney at Law, 9594 1st Ave NE # 367, Seattle, WA 98115-2012.
Daniel Barry Fosso, Attorney at Law, P.O. Box 5521, Kailua-Kona, HI 96745.
Counsel for Respondent(s), Jacob Cohen, Attorney at Law, P.O. Box 889, Oak Harbor, WA 98277-0889.
Catherine Wright Smith, Edwards Sieh Smith Goodfriend PS, 1109 1st Ave Ste 500, Seattle, WA 98101-2988.
COX, A.C.J.
Stephen Smith appeals the summary judgment order in favor of Dugualla Community, Inc., a homeowners’ association of which he is a member. Smith contends that the 2000 revisions of Dugualla’s bylaws effectively modified its Building and Use Restrictions (CCRs), contrary to the voting procedures of the CCRs. Furthermore, Smith argues that Dugualla could not impose liens against members’ property based on failure to pay membership fees. Smith also argues that the imposition of membership fees was improper because the original bylaws were unrecorded and therefore invalid. He further argues the notice of a special meeting was inadequate. Finally, Smith argues that the trial court erred when it awarded Dugualla attorney fees under RCW 64.38.050. Because there is no merit to any of these arguments, we affirm.
Smith has been a member of Dugualla since 1972. He served on the board for three years as secretary/treasurer during the mid-1990’s, and his wife was Dugualla’s bookkeeper for nine years.
The original bylaws for Dugualla had no procedure for their amendment, but did contain a provision authorizing the board to impose a membership fee. At the annual meeting in 2000, Dugualla’s membership voted by a simple hand vote of all lot owners to amend the bylaws. The purpose was to improve readability, remove redundancies, add a provision to place a lien on property for non-payment of fees, and clarify terms of office for elected Dugualla officials. The new bylaws reiterated the authority of the board to impose a membership fee, created the power to lien a member’s property, and established a procedure to amend the bylaws.
In March 2002, a special meeting of Dugualla members concerning whether and how Dugualla would fund a legal fight against a proposed gravel pit, and the funding options to pay for an upgrade to the water system.
The members voted to impose a membership fee of $100 per year to fund the gravel pit litigation. After the meeting, the board decided to increase the monthly water bill by $16 to pay for the water system improvements.
Smith brought this declaratory judgment action. Both parties moved for summary judgment. The trial court granted Dugualla’s motion, denied Smith’s motion, and awarded Dugualla attorney fees pursuant to RCW 64.38.050.
Smith appeals.
REVISION OF BYLAWS
Smith argues that the 2000 amendments to the bylaws effectively amended the CCRs without following the CCR voting procedures. Smith contends that amendments to any of Dugualla’s governing documents adding more restrictions and conditions to ownership must be made in accordance with the CCR procedures. We disagree.
This court may affirm an order granting summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.[1] This court reviews questions of law de novo.[2] Both parties agree that there are no genuine issues of material fact. We agree.
RCW 64.38.030 governs minimum provisions that must be contained in homeowners’ association bylaws. Unless provided for in the governing documents, the bylaws of the association shall provide for:
(1) The number, qualifications, powers and duties, terms of office, and manner of electing and removing the board of directors and officers and filling vacancies; (2) Election by the board of directors of the officers of the association as the bylaws specify; (3) Which, if any, of its powers the board of directors or officers may delegate to other persons or to a managing agent; (4) Which of its officers may prepare, execute, certify, and record amendments to the governing documents on behalf of the association; (5) The method of amending the bylaws; and (6) Subject to the provisions of the governing documents, any other matters the association deems necessary and appropriate.[3]
There is no similar statute requiring the placement of specific provisions in the CCRs.
Dugualla’s CCRs may only be `supplemented, relaxed, revoked or amended by a majority of the owners of building sites having completed dwellings upon the premises’[4] This is in contrast to the requirement for amendment of the bylaws, which requires only a simple majority of members present at the meeting in person or by proxy, regardless of whether completed dwellings are located on their property.
Smith takes issue with two amendments to the bylaws made in 2000. The first is a provision allowing the board to set an annual membership fee.[5] The second is the creation of the power to place a lien on a member’s property.
It is undisputed that the bylaws contain no language indicating that they were intended to amend the CCRs. Counsel properly conceded this point at oral argument.
Smith cites no authority, statutory or governing case law, for the proposition that amendments to bylaws, properly approved by homeowners association members, can constitute an amendment to the CCRs because of the subject matter of the amendment. He also fails to cite authority to support his argument that the placement of those provisions in the bylaws was contrary to law. Nevertheless, Smith argues that the authorities cited by him stand for the proposition that the obligation to pay assessments and the power to enforce a lien are covenants that touch and concern the land. Even if true, the law does not support Smith’s conclusion that new or amended covenants may only be imposed in accordance with the terms of Dugualla’s CCRs. Smith relies primarily on Lakeland Prop. Owner’s Ass’n. v. Larson[6] to support his contention that the bylaws cannot provide for the imposition of fees or the authority to lien. Smith is mistaken.
In that case, an Illinois court was asked to construe a restrictive covenant found in a deed.[7] In 1980, the homeowners’ association drafted Revised Deed Restrictions that imposed new covenants, including membership dues and the power to lien members’ property.[8] The court concluded, `{t}he provision permitting the change of covenants found in the instant deed clearly directs itself to changes of existing covenants, not the adding of new covenants which have no relation to existing ones.’[9] Lakeland does not help Smith where, as here, there is no binding deed language limiting the scope of the authority of Dugualla to impose membership fees or the power to lien. Lakeland is inapposite. Similarly, Lake Arrowhead Community Club, Inc. v. Looney[10]
does not lead to the result advocated by Smith. In Looney, our supreme court concluded that a covenant requiring an owner to pay an assessment for neighborhood maintenance touched and concerned the land such that it could not be extinguished by a tax foreclosure sale.[11] Although Looney supports Smith’s argument that an assessment is a covenant that touches and concerns the land, it does not aid Smith in proving that the placement of a fee assessment provision in the bylaws, instead of the CCRs, was contrary to law.
In Ticor Title Ins. Co. v. Rancho Santa Fe Ass’n,[12] a member in a residential development sought to place a tennis court on property subject to covenants governing development and land use in the neighborhood. The board, without consulting with the membership or engaging in the required vote, altered the setback requirements for the tennis court.[13] The California appellate court concluded that the board exceeded its authority when it enacted setback regulations different from those contained in the governing covenant.[14]
Ticor Title does not stand for the proposition advanced by Smith that amendments to the bylaws can operate to amend the CCRs. Rather, Ticor Title stands for the rather unremarkable rule that in order to amend the CCRs, the amendment procedures articulated in the CCRs must be followed.
Smith also cites Shorewood West Condominium Ass’n v. Sadri[15] to support his contention that amendments to bylaws are not sufficient when the CCRs are materially altered. Shorewood West is inapposite. First, the case was decided under the Horizontal Property Regimes Act, RCW 64.32.[16] Second, the court found nothing wrong with amending the bylaws to include a restriction on leasing, so long as it was done in accordance with the governing statute.[17] Smith does not contend here that there was any statutory violation. Finally, the court concluded: `{t}he statute does not allow an association of apartment owners to restrict leasing in a bylaw where the declaration itself permits leasing.’[18] This is not the case here because the CCRs are silent as to both membership fees and lien provisions. This case does not help Smith.
Smith cites Meresse v. Stelma[19] for the proposition that an amended covenant cannot be more restrictive than the original without unanimous consent. The court noted that it was dealing with a situation in which `changes in restrictive covenants differ in nature from those already in existence.’[20] The court held that under the facts of that case and the language of the restrictive covenants, the relocation of a road was not `maintenance, repairs’ or `additional construction on the road’ as provided for in the covenants.[21] Meresse does not stand for the proposition advanced by Smith that Dugualla’s bylaw amendments were contrary to law or the terms of the CCRs.
Similarly, Smith’s citation to Riss v. Angel[22] is inapposite. In Riss, members of the homeowners’ association rejected the plaintiffs’ building plans under a consent to construction clause in the association’s restrictive covenants.[23] Our supreme court concluded that an association could not impose restrictions more burdensome, or beyond the stated maximum or minimum criteria in the covenants.[24]
Riss does not assist Smith in proving that provisions in the 2000 bylaws, and approved according to the voting procedures in those bylaws, were invalid.
The same reasoning applies to Smith’s challenge to the lien provision adopted in the 2000 bylaw amendments. Assuming that the lien provision is a covenant that touches and concerns the land, Smith fails to explain how this fact alone renders invalid the placement of this provision in the bylaws. We further conclude that the membership’s approval of this provision by a vote that complied with the voting procedures for bylaws was a lawful action. Similarly, we do not find Smith’s argument that voting rights were diluted by the process persuasive in light of the conclusion that Dugualla’s actions, and the procedures used for voting on the amendments, were proper.
Finally, Smith makes the rather circuitous argument that the 2000 amendments to the bylaws were not proper because the original bylaws contained no provision for how amendment might take place. He insists that the trial court erroneously used the language in the 2000 bylaws as authority for the 2000 amendments to the bylaws. This argument is not persuasive.
RCW 64.38.030(5), enacted in 1995, requires that bylaws contain a provision defining the procedures for amendment. The 2000 bylaws corrected the absence of this provision in the original bylaws. Smith does not contest that the bylaws were properly amended by a `simple majority vote of the Members present in person or by proxy at {the annual} meeting,’ as required under the 2000 bylaw amendments. Accordingly, we reject this argument.
Smith’s contention that Dugualla must have intended the bylaws to alter materially the CCRs because they recorded the new bylaws is not persuasive. The purpose of recording such documents is to provide notice.[25] The simple act of recording bylaws does not, without more, lead to the conclusion that Dugualla intended to, or did, amend the CCRs.
We conclude that the 2000 amendments to the bylaws were valid and did not amend the CCRs.
POWER TO LIEN
Smith contends that Dugualla lacked the authority to grant itself the power to lien property for nonpayment of fees. Again we disagree.
As a preliminary matter, Dugualla contends that this issue is not ripe for review because Dugualla has not attached a lien to Smith’s property. Dugualla’s citation to Isla Verde International Holdings, Inc. v. City of Camas[26] is inapposite because that case involved a challenge under the Land Use Petition Act (LUPA) to impact fees that had not been imposed.[27] Thus, there was no final action reviewable under LUPA. This is a declaratory judgment action.[28] One of the purposes of a declaratory judgment is to give relief to a party faced with choosing between actions, with the possibility that penalties will be imposed if the wrong choice is made.[29] Furthermore, `a claim is ripe for judicial determination if the issues raised are primarily legal and do not require further factual development, and the challenged action is final.’[30] Here, the challenged action, Dugualla’s right to lien members’ property, is final and presents a legal question concerning the validity of this action.
We conclude the issue is ripe, address Smith’s argument, and conclude that it is unpersuasive. Article IX, section 3 of the bylaws states:
In the event of overdue payments, members shall pay to the Corporation the full amount owed including but not restricted to late fees, attorneys’ and collection agency fees and costs reasonably incurred in enforcing payment.
The amount owed to the Corporation shall be a lien on the member’s real property (as described in Article I, Section 1), superior to any and all other liens created or permitted by the owner and enforceable by foreclosure proceedings in the manner provided by law for foreclosure of mortgages upon land. Proceedings for the foreclosure of this lien shall not be commenced sooner than four months after the date the first billing notice was mailed to the Member.[31]
The articles of incorporation authorize Dugualla to perform any actions that are necessary and proper to accomplish its purposes, `and which are not repugnant to law.’ Under RCW 64.28.020(13) and (14), Dugualla may exercise all powers that may be exercised by the same type of corporation, and exercise any other powers necessary and proper for the governance and operation of the association. As a nonprofit corporation, Dugualla can `make and alter bylaws, not inconsistent with its articles of incorporation or with the laws of this state, for the administration and regulation of the affairs of the corporation.’[32]
Smith cites no persuasive authority to support his argument that Dugualla’s actions in creating the power to lien were improper. Nevertheless, Smith insists that Dugualla cannot grant itself the power to lien unless the members accept a deed subject to a lien covenant, as in Pinebrook Homeowners Ass’n v. Owen,[33] or execute a written agreement, as in Looney. Smith is mistaken in both cases.
Smith cites Owen for the proposition that only property purchased subject to recorded CCRs containing a lien provision can be subject to a homeowners’ association lien. Smith is mistaken. In Owen, the court concluded that property protected by the homestead exemption could not be sold to satisfy a judgment foreclosing an assessment lien of a homeowners’ association because: `the foreclosure and sale amount to an execution within the meaning of RCW 6.12.090; the lien does not qualify as one of the statutory homestead exceptions in RCW 6.12.100; and the lien does not qualify for the nonstatutory exception developed by case law.’[34] Owen addressed only the foreclosure of a homeowners’ association lien under the homestead exemption, not the ability of the association to acquire the power to lien property.
Smith also cites a footnote in Looney for the proposition that he is subject to Dugualla’s power to lien only if he personally executed a written, recorded agreement to that effect. The footnote does not stand for the proposition cited and Smith’s argument is untenable on this basis.[35]
Smith also challenges Dugualla’s ability to make its lien superior to other liens. Smith cites no authority to support his argument that the actual language used in the bylaws concerning the lien power is contrary to law. `The lien first in time is the lien first in right, unless the holder of the lien first in time voluntarily subordinates it.’[36]
Dugualla’s lien could only be superior to the extent it precedes in time other liens. Smith reads the language in the bylaws too broadly.
Smith also argues that the lien provision is contrary to law because it violates the schedule and notice requirements in RCW 64.38.020(11). This argument is purely speculative because there is no indication in the bylaws or the record that Dugualla would employ a procedure not in compliance with RCW 64.38.020(11). The bylaws are not contrary to the statutory provision.
In summary, Smith cites no case on point supporting his position that the power to lien granted to Dugualla by a vote of the membership is contrary to law and the cases he does cite do not support the position advanced or are not on point. We conclude that Smith’s argument is not persuasive.
MEMBERSHIP FEE
Smith argues that the original bylaws were unsigned, undated, unrecorded, and therefore invalid, not part of any contractual agreement between himself and Dugualla, and improper authority for the imposition of the membership fee. There is nothing in the record to indicate that Smith raised this argument below. Smith claims he did raise this argument, but fails to give citation to the record to support this contention. Accordingly, we do not address the point. Smith also argues that the membership fee was not really a membership fee but was actually an assessment to pay the legal fees to fight the gravel pit. Smith fails to explain why this is improper, and he fails to cite any authority to support the proposition that this was an invalid exercise of Dugualla’s authority. This court will not review an issue raised in passing or unsupported by authority or persuasive argument.[37]
SPECIAL MEETING NOTICE
Smith next argues that notice for the special meeting in March 2002 was legally insufficient under RCW 64.38.035 and thus the membership fee assessment agreed to at that meeting is invalid. We disagree.
RCW 64.38.035(1) states in pertinent part:
The notice of any meeting shall state the time and place of the meeting and the business to be placed on the agenda by the board of directors for a vote by the owners, including the general nature of any proposed amendment to the articles of incorporation, bylaws, any budget changes in the previously approved budget that result in a change in assessment obligation, and any proposal to remove a director.
The 2000 bylaws state: `{n}otice of meetings of the Members stating the time, place and general purpose of the meeting shall be mailed to each Member at their last known address at least ten days prior to Special Meetings.’ The February 8, 2002 notice for the March 9, 2002 special meeting states:
(1) a special meeting will be held on March 9, 2002 at 1:00 pm at the Dugualla Community Clubhouse on Beacon View Drive; (2) Dugualla has been working for several years to bring the water system into compliance with Washington standards; (3) based on previous projects of this size and scope, the cost will be approximately $300,000; (4) during the meeting the Board will review the water system upgrade plans and discuss funding options for the improvements; (5) also discussed will be Dugualla’s fight against a proposed surface gravel pit; and (6) there will be a call to vote on the propriety of funding such litigation and the method for funding, if the members agree to proceed with the fight.
This notice was sufficient under RCW 64.38.035 and Dugualla’s bylaws. Smith’s argument that past practice requires a different result is not persuasive. Smith argues that in the past the board would provide members with a summary of the monetary impact of any budgetary issue to be discussed at a meeting with the notice of the meeting. Smith contends that Dugualla’s failure to provide such a summary renders the notice legally insufficient. But neither RCW 64.38.035(1) nor the bylaws requires such a summary be included in any notice for a special meeting.
Smith argues in the alternative that even if the 2002 special meeting notice was sufficient, the Board failed to comply with the ratification requirement for the budget under RCW 64.38.025. Smith misconstrues the law.
Under RCW 64.38.025(2), the Board may not take any action that requires the vote or approval of the owners. RCW 64.38.025(3) states that when the board adopts a budget, it `shall set a date for a meeting of the owners to consider ratification of the budget’ Thus, if the board, without a vote by the owners, adopts a budget, the board must submit the budget to the owners for approval or rejection. Here the membership did vote on the budget.
At the 2002 special meeting, the membership voted to approve the funding of a legal fight against a proposed surface mining operation. The membership also voted to fund the legal fees with an annual $100 Dugualla membership fee, consistent with the provision in the bylaws that allows the imposition of such a fee. The membership also voted, at the 2000 annual meeting, to authorize the board to raise money in the most fiscally responsible way possible to fund the capital improvements to the water system. The board decided in March 2002, consistent with the authority granted to it in 2000, to impose a $16 per month increase in water charges to fund the water system improvements.
In short, the notice of the special meeting was sufficient, past practice is irrelevant, and Smith’s argument that under RCW 64.38.025(3) the board failed to have the membership ratify the budget is unpersuasive.
ATTORNEY FEES
Finally, Smith argues that the trial court erred when it granted Dugualla attorney fees pursuant to RCW 64.38.050 without engaging in the analysis required to determine whether the award was proper. We find this argument unconvincing.
Under RCW 64.38.050, `{a}ny violation of the provisions of this chapter entitles an aggrieved party to any remedy provided by law or in equity. The court, in an appropriate case, may award reasonable attorneys’ fees to the prevailing party.’ An appellate court reviews the reasonableness of an award of attorney fees and costs for an abuse of discretion.[38]
Smith contends that the trial court did not exercise its discretion as the statutory language requires. He fails to explain how there was a failure to exercise discretion here. We find no abuse of discretion in the award of reasonable attorney fees to Dugualla under RCW 64.38.050.
Smith next argues that the imposition of attorney fees in a declaratory judgment action is against public policy. Smith fails to cite any authority that a declaratory judgment action of this nature does not support attorney fee awards if a statutory provision for the award of attorney fees exists. Furthermore, his argument that attorney fees are not appropriate in declaratory judgment actions falters in the face of his own claim for attorney fees both below and on appeal.
Both Smith and Dugualla argue that they are entitled to attorney fees on appeal under RAP 18.1. Smith is not the prevailing party and is therefore not entitled to attorney fees on appeal. Dugualla is the prevailing party and we conclude that an award of reasonable fees and costs on appeal is proper.
We affirm the summary judgment order.
ELLINGTON and AGID, JJ., concur.
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