171234 Canada Inc. v. AHA Water Cooperative, Inc.

2008 VT 115, 968 A.2d 303, 184 Vt. 633, 2008 Vt. LEXIS 142
CourtSupreme Court of Vermont
DecidedAugust 25, 2008
DocketNo. 07-086
StatusPublished
Cited by9 cases

This text of 2008 VT 115 (171234 Canada Inc. v. AHA Water Cooperative, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
171234 Canada Inc. v. AHA Water Cooperative, Inc., 2008 VT 115, 968 A.2d 303, 184 Vt. 633, 2008 Vt. LEXIS 142 (Vt. 2008).

Opinion

¶ 1. Defendant, AHA Water Cooperative, Inc. (AHA), appeals orders of the Franklin Superior Court, granting summary judgment to plaintiff, 171234 Canada Inc. (Canada Inc.) and denying a related motion for intervention. On appeal, AHA argues that the court erred in: (1) granting summary judgment to Canada Inc. on the basis of a theory not raised by either party in the pleadings; (2) denying a motion to dismiss for lack of an indispensable party; and (3) misapplying common and statutory law governing common-interest ownership. A group of landowners in the development at issue appeal the denial of their motion to intervene. We affirm in all respects.

¶ 2. This litigation involves the Alpine Haven development, the subject of an earlier decision of this Court. See Alpine Haven Prop. Owners Ass’n v. Deptula, 2003 VT 51, 175 Vt. 559, 830 A.2d 78 (mem.). Pursuant to deed covenants, the developer supplied water to most of the properties in Alpine Haven. The developer transferred the water system to AHA, with approval of the Public Service Board. Since that time, AHA has provided water to most of the property owners, including Canada Inc. In the period leading up to September 2, 2004, Canada Inc. experienced difficulty with the quantity and quality of water supplied by AHA. On September 2, Canada Inc. notified AHA of its withdrawal from the cooperative and its intention to dig its own well to supply water for the property. [634]*634AHA responded to the withdrawal letter, explaining that Canada Inc. could not withdraw from the cooperative or stop paying for water services, “[b]ecause the obligation to render potable water exists as a matter of a deed covenant [and] remains unaffected by [resignation from] membership in the Cooperative.” AHA’s position was that the payment and provision of water were governed by a restrictive deed covenant, which provided in pertinent part:

The Grantor hereby agrees to keep and maintain said right of way in a good, reasonable state of repair, and it agrees to supply water to said premises as now piped and it agrees to supply garbage removal for said premises as now in existence. For these services, the grantees, their heirs, executors, administrators or assigns, shall pay to the grantor, its successors and assigns, a reasonable annual fee therefor.

¶ 3. In response to AHA’s continuing demands for payment, Canada Inc. began the present action in October 2004. This appeal involves Canada Inc.’s request for a declaratory judgment. Canada Inc. argued that a declaratory judgment was appropriate, because AHA’s bylaws “provid[ed] for the voluntary withdrawal of members.” Canada Inc. claimed that it had voluntarily withdrawn in compliance with the bylaws and, in March 2006, moved for summary judgment on that basis.

¶ 4. AHA filed its own summary-judgment motion in response. AHA primarily emphasized that Alpine Haven was a common-plan community, governed by restrictive covenants covering the land. Because Canada Inc.’s land was covered by such a covenant, AHA reasoned, Canada Inc. had to comply with the terms of the covenant. In AHA’s view, the covenant required owners to pay for water services whether or not any services were provided. For a number of reasons, AHA also argued that the bylaw provisions on which Canada Inc. relied did not control the outcome of the case.

¶ 5. In its reply, Canada Inc. disagreed that its membership in a common-scheme development created an obligation to pay for water services no longer received. Canada Inc. further argued that, even if a common scheme were found, the effect of the covenant “would only be to extend other property owners within the scheme a right to enforce [grantor’s] rights ... as if they stood in [grantor’s] shoes.” According to Canada Inc., neither the language of the covenant nor the original intent of the parties suggested that the covenant required owners to pay when no longer receiving any services. Attached to Canada Inc.’s reply was an affidavit from the original developer of Alpine Haven, who stated that his intent in drafting the covenant language was to require lot owners to pay for water only if they chose to receive it.

¶ 6. AHA filed no further response. On August 28, 2006, the court granted summary judgment to Canada Inc. The court first examined the covenant language and concluded that the covenants were ambiguous as to whether “Canada, Ine.’s obligation to pay a reasonable fee is contingent upon Canada, Inc. accepting water from AHA.” Concluding that the covenant was ambiguous, the court proceeded to determine, based on all the evidence, the intent of all the original parties to the covenant. Based primarily on the affidavit of the developer, the court concluded that “the original parties . . . intended the covenant to mean that the property owner must pay a reasonable annual fee for the supply of water if and only if the owner accepts water service.”

¶ 7. The court further concluded that this interpretation was in accord with the bylaws in effect on the date of Canada [635]*635Inc.’s first attempt at withdrawal. The court stated that the bylaws were relevant insofar as they “may be considered in interpreting an ambiguous provision.” The court read the bylaws as permitting withdrawal from the cooperative and termination of all payment obligations but requiring payment of “a disconnect fee and all fees owed for services ... prior to the termination.”

¶ 8. The court also reasoned that AHA had failed to raise an issue of material fact regarding the intent of the original parties to the deed and whether the Vermont Uniform Common Interest Ownership Act (UCIOA) applied to the facts of the case. With respect to the UCIOA, the court stated that AHA had neither recorded a declaration nor referred to the declaration in the deeds, as the UCIOA requires.

¶ 9. Later, on September 29, 2006, property owners — residents of Alpine Haven and members of the AHA Cooperative —moved for intervention, joinder, and related relief under Vermont Rules of Civil Procedure 24 and 19. Property owners argued that the UCIOA and the common law entitled them to enforce their rights as members of the common-interest community against any other member, including Canada Inc. Accordingly, property owners argued, the court should grant their motion for intervention and recognize them as necessary and indispensable parties.

¶ 10. Furthermore, property owners suggested, Canada Inc. acted in bad faith in failing to join them as necessary parties. In support of this claim, property owners asserted that Canada Inc. did not raise any argument about the ambiguity of the covenant until Canada Inc. filed a motion in opposition to AHA’s motion for summary judgment. According to property owners, Canada Inc.’s failure to formally amend its pleadings or to serve all affected property owners with process was evidence of Canada Inc.’s bad faith.

¶ 11. Also on September 29, 2006, AHA moved to vacate the court’s decision “as void ab initio.” (Emphasis omitted.) As a part of this motion, AHA argued that Canada Inc. improperly filed the grant- or’s affidavit with its opposition to AHA’s motion for summary judgment. AHA asserted that the court had based its ambiguity analysis on the wrongly submitted affidavit and that, consequently, the court “had no proper proof upon which to base a decision in favor of [Canada Inc.].” In addition, AHA argued that: (1) the court ignored the law governing common-scheme developments in its summary-judgment decision; and (2) the deeds covering Alpine Haven served as an adequate declaration under the UCIOA.

¶ 12. The court denied these motions on several grounds.

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2008 VT 115, 968 A.2d 303, 184 Vt. 633, 2008 Vt. LEXIS 142, Counsel Stack Legal Research, https://law.counselstack.com/opinion/171234-canada-inc-v-aha-water-cooperative-inc-vt-2008.