Dreamland Villa Community Club, Inc. v. Raimey

226 P.3d 411, 224 Ariz. 42, 578 Ariz. Adv. Rep. 17, 2010 Ariz. App. LEXIS 32
CourtCourt of Appeals of Arizona
DecidedMarch 16, 2010
Docket1 CA-CV 08-0388
StatusPublished
Cited by38 cases

This text of 226 P.3d 411 (Dreamland Villa Community Club, Inc. v. Raimey) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dreamland Villa Community Club, Inc. v. Raimey, 226 P.3d 411, 224 Ariz. 42, 578 Ariz. Adv. Rep. 17, 2010 Ariz. App. LEXIS 32 (Ark. Ct. App. 2010).

Opinion

OPINION

THOMPSON, Presiding Judge.

¶ 1 This appeal and cross-appeal concern the validity of amendments to deed restrictions creating a homeowners’ association and requiring homeowners within the community to pay assessments as well as the trial court’s decision not to award attorneys’ fees to the prevailing party in the matter. For the following reasons, we reverse and remand.

FACTUAL AND PROCEDURAL HISTORY

¶2 Dreamland Villa is a residential community comprised of eighteen sections. Each section contains a different number of residential lots. The first section was created in 1958, and the last section was constructed in 1972. Every residence within Dreamland Villa must be occupied by at least one person age fifty-five or older. Dreamland Villa does not have any common areas.

¶ 3 Dreamland Villa Community Club, Inc. (DVCC) was incorporated in 1961 as a nonprofit corporation by volunteer members to provide recreational facilities to those who joined the club. Those recreational facilities included clubhouses, a recreational center with swimming pools, shuffleboard courts, and a ballroom. DVCC also organized planned activities for its members.

¶4 Each Dreamland Villa section is governed by a separate set of deed restrictions called “Declaration of Restrictions” (Declarations), which were recorded in the 1960s and 1970s. 1 With the exception of section 18, all of the Declarations contain similar provisions concerning the appearance and maintenance of residences within the relevant section. 2 There are no provisions about DVCC. Regarding amendments, the Declarations provide that “said covenants and restrictions may at any time be changed in whole or in *44 part or revoked in their entirety by a vote of the owners of a majority of the lots.” 3

¶ 5 The Declarations for section 18 contain similar restrictions but provide additional restrictions not included in the Declarations for the other sections. Specifically, the Declarations for section 18 provide, in relevant part:

Each residential unit in DREAMLAND VILLA EIGHTEEN is hereby subjected to the initial and annual assessments herein described in favor of DREAMLAND VILLA COMMUNITY CLUB.... The assessments are for the purpose of aiding the CLUB to acquire, maintain, improve and operate recreational and other facilities, and to exercise, carry ón and conduct any and all of its corporate activities.

The annual assessment, however, was only to be imposed on nonmembers of DVCC. Members were to pay a membership fee.

¶ 6 In 2003 and 2004, DVCC recorded a Second Amended Declaration of Restrictions (Second Amended Declarations) for each section within Dreamland Villa. Each Second Amended Declaration requires lot owners to pay annual assessments and special assessments levied by DVCC “to promote the recreation, health, safety and welfare of the residents ... and for the improvement, maintenance, and replacement of the Common Areas.” Except as to section 18, no previous Declaration required the payment of assessments or even mentioned DVCC or common areas.

¶ 7 Beginning in December 2006, DVCC filed a number of lawsuits against various sets of homeowners 4 within Dreamland Villa for failing to pay annual assessments. Certain sets of homeowners filed identical answers and counterclaims, maintaining that the Second Amended Declarations were void and that they could not be forced to become members of a nonprofit corporation or pay assessments. These homeowners reside in sections 7, 14, 15, 16, 17, and 18 of Dreamland Villa. The homeowners successfully moved to consolidate the lawsuits filed by DVCC.

¶ 8 DVCC filed separate motions for summary judgment against each set of homeowners. The motions for summary judgment and supporting statements of facts set forth each homeowner’s outstanding assessments, including late charges, finance charges, and attorneys’ fees. The homeowners filed a consolidated response to DVCC’s motions for summary judgment, arguing that they never consented to become members of DVCC and that there were factual issues regarding the validity of the Second Amended Declarations. The homeowners also requested relief pursuant to Arizona Rule of Civil Procedure 56(f).

¶ 9 In May 2007, certain homeowners filed a motion for summary judgment, 5 arguing that DVCC could not impose membership in DVCC without the homeowners’ consent and that the original Declarations could not be amended to require membership in DVCC. The trial court later ordered DVCC to file a responsive brief to address certain issues raised in the homeowners’ reply, including whether (1) the Second Amended Declarations were ever validly recorded, (2) the petitions used to obtain votes informed lot owners that they were voting to create a homeowners’ association, (3) DVCC intentionally misled lot owners to obtain the requisite number of votes needed to amend the Declarations, and (4) DVCC obtained a majority of the signatures needed to amend the Declarations in some sections.

¶ 10 In September 2007, the trial court denied the homeowners’ request for Rule 56(f) relief and ruled, in relevant part:

At the heart of this dispute is the issue of whether the Second Amended Declaration *45 of Restrictions, which, in effect, made membership in the Plaintiff non-profit corporation mandatory for all subject homeowners, is valid.
Dreamland Villa consists of eighteen sections of homeowners, each subject to differing Declarations of Restrictions. A review of these reveals that the Declaration of Restrictions applicable to the homeowners in sections 18 and 19[ 6 ] allows mandatory membership in a nonprofit corporation such as Plaintiff. Thus, as to those homeowners, there is no real dispute — they can be required to be members of Plaintiff corporation and pay assessments or fees related thereto.
As to the parties to this ease which are homeowners in five of the remaining sixteen sections, there was a vote of homeowners in 2003 to determine whether the Declaration of Restrictions should be amended to make membership in Plaintiff corporation mandatory____ As to all five relevant sections (7, 14, 15, 16 and 17) a majority of homeowners voted in favor of allowing the amendment.
Membership in a nonprofit corporation requires a person’s express or implied consent. [Arizona Revised Statutes (AR.S.) ] § 10-3601(B) [2004], Our appellate courts have held that when a homeowner takes a deed containing [a] deed restriction that allows for amendment by the vote of a majority of homeowners, that homeowner implicitly consents to the subsequent majority vote to make membership in a homeowner association mandatory. Shamrock v. Wagon Wheel Park Homeowners Assn., 206 Ariz. 42, 75 P.3d 132 (App.2003).

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Bluebook (online)
226 P.3d 411, 224 Ariz. 42, 578 Ariz. Adv. Rep. 17, 2010 Ariz. App. LEXIS 32, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dreamland-villa-community-club-inc-v-raimey-arizctapp-2010.