Council of Unit Owners of Sea Colony East v. Carl M. Freeman Associates, Inc.

531 A.2d 1217, 1987 Del. Super. LEXIS 1443
CourtSuperior Court of Delaware
DecidedJune 10, 1987
StatusPublished
Cited by2 cases

This text of 531 A.2d 1217 (Council of Unit Owners of Sea Colony East v. Carl M. Freeman Associates, Inc.) is published on Counsel Stack Legal Research, covering Superior Court of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Council of Unit Owners of Sea Colony East v. Carl M. Freeman Associates, Inc., 531 A.2d 1217, 1987 Del. Super. LEXIS 1443 (Del. Ct. App. 1987).

Opinion

MARTIN, Judge.

This is the Court’s decision on defendants’ Carl M. Freeman Associates, Inc., Sea Colony Inc., Sea Colony Development Corporation, Inc., and Sea Colony Management, Inc. (“Freeman defendants”) motion to dismiss the complaint filed by plaintiff Council of Unit Owners of Sea Colony East, Phases VI, VII, IV, III Condominium (“the Council”).

The Freeman defendants’ motion to dismiss is based upon three premises:

1. That the Council does not have capacity to bring this action on behalf of all of the individual Unit Owners, i.e. the Unit Owners are the real parties in interest;

2. That the Council does not have standing to sue;

3. That the individual Unit Owners need to be joined as persons needed for a just adjudication.

The Freeman defendants’ initial assertion is that the Council is not the real party in interest as required by Superior Court Civil Rule 17(a) in that it does not have the authority, pursuant to the Delaware Unit Property Act, to prosecute this action. It is further asserted by the Freeman defendants that because of their right to utilize all of the defenses available against the real party in interest as well as their right to be fully protected in the event that another suit is filed, they have a right to insist that an action brought against them be in the name of the real party in interest. Finally, the Freeman defendants have cited various cases in which courts in other jurisdictions have held that community associations are not the real party in interest in order to bring suit on behalf of their members. Friendly Village Community Association, Inc., No. IV v. Silva Hill Construction Co., Cal.Ct.App., 31 Cal.App.3d 220, 107 Cal.Rptr. 123 (1973); Equitable Life Assurance Society of the United States et al. v. Tinsley Mill Village, Ga.Supr., 294 Ga. 769, 294 S.E.2d 495 (1982); Summerhouse Condominium Association, Inc. v. Majestic Savings and Loan Association, Colo.Ct.App., 44 Colo.App. 495, 615 P.2d 71 (1980).

The Council responds by explaining that it is suing in a representative capacity on behalf of all of the owners for defects in common elements by virtue of its responsibility for the maintenance and repair of the building and for any proceedings which may be instituted on behalf of the owners. Therefore the Council concludes that the assertion that the Council is not the real party in interest is negated.

[1219]*1219Additionally, the two reasons mentioned by the Freeman defendants in support of their alleged right to insist that an action brought against them be in the name of the real party in interest are claimed by the Council to be inapplicable. Specifically, as to any claim for defects the Council contends that defendants may assert any defenses against it which they would have against any individual Unit Owner. The problem of protection from future awards is also contended by the Council to be negated in that all interests are represented by the Council and ownership is undivided and common among all individual Unit Owners.

Lastly, the Council argues that the authority cited by the Freeman defendants in support of their assertions under Rule 17(a) should be distinguished. Friendly Village, supra 107 Cal.Rptr. at 123, a case cited for the proposition that a condominium association is not the real party in interest, is dated, according to the Council. Lash v. Lion Property Corp., Cal.Ct.App., 128 Cal.App.3d 925, 180 Cal.Rptr. 722, 726 (1983), is instead noted for the Court’s teaching that “[t]he right of organizations (such as Association) to sue as representatives of all the individual members/owners for damage to areas owned in common is well established by reason and precedent.” (Emphasis in original). In explaining its rationale for such decision the Court in Lash stated that:

[b]eeause damage to the common areas, such as walkways and stairs, affect all the unit owners, it is not only logical that the common questions of law and fact be resolved in one proceeding, but it is judicially economical and cost beneficial to do so.

Equitable, supra 294 S.E.2d at 495, a case cited by defendants as illustrative of a court finding a condominium association not to be the real party in interest, was a case where the association sought compensation for flooding of both common areas and individual units. The court’s ruling that the,condominium association was not the real party in interest was based upon its concern “that an award of damages to the Association without specifying the amount to be awarded each recipient could easily create discord within the Association and foster more litigation.” Id. at 498. In the case sub judice such concerns are not present as damages are only being sought with respect to common elements.

Similarly, Summerhouse, supra 615 P.2d at 71, must be distinguished from the facts of the case sub judice. In Summerhouse here is no indication that the association was seeking damages for commonly held property, but rather it appears that the association was seeking to represent all owners with common claims rather than common ownership. The Court’s decision turned on the fact that the claims represented were breaches of obligations flowing from the individual purchase agreements which are “an individual unit owner’s claim, not the condominium association’s claim.” Id. at p. 73.

The Freeman defendants next assert in support of their motion to dismiss that the Council lacks standing to sue on behalf of the Unit Owners. The operative statute governing condominium properties is the Delaware Unit Property Act (“the Act”), 25 Del.C. §§ 2201, et seq. The Act provides specifically in § 2212 that:

the council shall on behalf of the unit owners:
(1) Have power to manage the business operations and affairs of the property ...; and
(2) Have such incidental powers as may be appropriate to the performance of their duties.

The Act also provides that the administration of the property shall be governed by a code of regulations. The Freeman defendants assert that although the Code of Regulations of Phase VI states in Article III, Section 2(i) that the Council shall have the power of “enforcing by legal means the provisions of the Declaration, this Code of Regulations and the rules and regulations for the use of the property adopted by it and bringing any proceedings which may be instituted on behalf of the owners”, the Act itself does not empower the Council to sue on behalf of the individual Unit Own[1220]*1220ers. The Code of Regulations may not, the Freeman defendants assert, be used to create a right which is not statutorily conferred by the Delaware Unit Property Act. The argument continues that Article III, Section 2(i) of the Code merely permits the Council to bring an action it is otherwise legally justified to bring, but cannot create the capacity or the legal basis for the Council to sue on behalf of the Unit Owners.

In support of this proposition, the Freeman defendants cite Council of Unit Owners of Pilot Point Condominium v.

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531 A.2d 1217, 1987 Del. Super. LEXIS 1443, Counsel Stack Legal Research, https://law.counselstack.com/opinion/council-of-unit-owners-of-sea-colony-east-v-carl-m-freeman-associates-delsuperct-1987.