East Shore Beach Condo. Assn. v. Eddleston

• Court: Superior Court of Maine
• Decided: April 18, 2014
• Docket: CUMcv-12-473
• Status: Unpublished

Opinion

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STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION DOCKET NO. CV-12-473

EAST SHORE BEACH U(l~(2J)fl.4 CONDOMINIUM ASSOCIATION,

Plaintiff, ORDER ON MOTIONS FOR v. SUMMARY JUDGMENT

STEVEN R. EDDLESTON and DANIEL MOSELEY,

Defendants.

Both parties have filed motions for summary judgment on the plaintiff's

complaint and the defendants' counterclaim. For the following reasons, both

motions are denied.

Background

East Shore Beach Condominium Association is comprised of 24 units

located in Naples, Maine. (Defs.' Supp. S.M.F. 'IT'IT 1-2.) Units 1-15 are housed

within three buildings, and units 16-24 are each freestanding units, similar to

single-family homes. (Defs.' Supp. S.M.F. 'IT 2.) The Association's governing

document is the Declaration of Condominium, which may only be amended

pursuant to certain specified procedures. (Defs.' Supp. S.M.F. 'IT 1; Pl.'s Add.

S.M.F. 'IT 1.) In 1999, Marge and Jim Lanoix owned one of the freestanding units

and asked the Association for permission to expand their unit. (Defs.' Supp.

S.M.F. 'IT 3.) Under the Association's Declaration, the Lanoix request required the

approval of all 24 of the unit owners. (Defs.' Supp. S.M.F. 'IT 4.) At the May 28,

2000 annual meeting of the Association, the Lanoix proposal was ~ected by_,il STAtE Of MAINt: Cumberland, D, Clerk's Ollk:e APR 18 2014

RECEIVED ( (

vote of 22 in favor and 1 against of the 23 owners present. (Defs.' Supp. S.M.F.

4.)

On August 4, 2000, Vin and Sharon Indorato, owners of Unit 18, revived

the Lanoix request and presented the renewed request at a Special Meeting of the

Association held on September 3, 2000. (Defs.' Supp. S.M.F.

very different characterizations of the actions that took place at the September 3,

2000 meeting.

According to defendant Steve Eddleston, who was on the Association's

Executive Board at the time, the unit owners eventually approved the Indorato

amendment to the Condominium Declaration ("the Declaration"). (Defs.' Supp.

provided they met two conditions: (1) all owners of the freestanding units had to

agree on a single design for expansions, and (2) the Association's Executive

Board had to approve the expansion plans. (Defs.' Supp. S.M.F.

According to plaintiff, the Indorato proposal"was, essentially, a resolve or

expression of openness to the idea of permitting additions to the free-standing

units, but it was not an amendment to the declaration." (Pl.'s Opp. S.M.F.

Because there was no actual text amendment to the Declaration introduced,

plaintiffs claim that none of the owners believed that they had amended the

Declaration at the September 2000 meeting. (Pl.'s Opp. S.M.F.

the case is whether the September 3, 2000 vote by the Association's members was

a valid approval of an amendment to the Declaration.

The parties agree that Association members unanimously approved the

meeting minutes of the September 3, 2000 meeting at their annual meeting on

May 26, 2001. (Defs.' Supp. S.M.F. «J[ 7.) In 2003, the Executive Board created a

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new collection of Standards for the Association, which included a section called

"Addition to Free-Standing Units." (Defs.' Supp. S.M.F. <[ 9.) Under this section,

additions could be built on the back of the units' garages, subject to Board

approval. (Defs.' Supp. S.M.F. <[ 9.) These Standards were distributed to the

Association's members at the 2003 Annual Meeting and have been on the

Association's website since that date. (Defs.' Supp. S.M.F. <[ 10.)

Defendants claim that at least two prospective purchasers of the

freestanding units, including defendant Daniel Moseley, relied on the

Association's representations about the 2000 amendment in purchasing the units.

(Defs.' Supp. S.M.F. <[ 12.) Plaintiff denies that any prospective buyers were told

about the amendment. (Pl.'s Opp. S.M.F. <[ 12.)

In May 2012, Eddleston was president of the Association and Moseley was

Secretary. (Defs.' Supp. S.M.F. <[ 14.) At the annual meeting on May 27, 2012, the

Board, including both defendants, became aware that the 2000 Proposal was

never recorded in the Registry of Deeds as required by 33 M.R.S. § 1602-117(3) of

the Maine Condominium Act. (Defs.' Supp. S.M.F. <[ 15.) The Board hired an

attorney to prepare a revision of the 2000 Proposal before it was recorded. (Defs.'

Supp. S.M.F. <[ 16.)

The Board held meetings in August 2012 to discuss the new proposal to

amend the Declaration, and a meeting was scheduled for September 3, 2012 to

allow Association members to vote on the changes. (Defs.' Supp. S.M.F. <[<[ 17-

18.) According to plaintiffs, Association members strongly objected to the new

proposed amendment. (Pl.'s Opp. S.M.F. <[ 19.) A member of the Board delayed

the September 3, 2012 vote, and other members circulated a petition, signed by

two-thirds of Association members, calling for the removal of Eddleston and

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Moseley as members of the Board. (Defs.' Supp. S.M.F.

19.)

Eddleston and Moseley consulted an attorney and recorded a certificate in

the Registry of Deeds documenting the 2000 proposal on September 21, 2012.

(Defs.' Supp. S.M.F.

attorney had already advised them that the Declaration was not amended in

2000. (Pl.'s Opp. S.M.F.

someone could challenge the validity of the amendment. (Pl.'s Opp. S.M.F.

Shortly after filing the certificate, the two defendants resigned as officers

of the Board. (Defs.' Supp. S.M.F.

new president and secretary filed an affidavit in the Registry of Deeds contesting

the validity of the certificate. (Defs.' Supp. S.M.F.

Procedural History

On November 16, 2012, the Association filed their two-count complaint

against Eddleston and Moseley. In Count I, plaintiff seeks declaratory judgment

that the certificate recorded by defendants is invalid and that defendants

breached their fiduciary duties to the Association when they recorded it. The

parties agreed to dismiss count II of the complaint. The defendants filed a motion

to dismiss on December 14, 2012, which was denied by the Court on May 30,

2013. Thereafter, defendants filed an answer and a counterclaim, seeking

indemnification based on the Declaration and the Maine Nonprofit Corporation

Act. Defendants filed a motion for summary judgment on August 30, 2013;

plaintiff opposed the motion and filed a cross-motion for summary judgment.

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Discussion

1. Standard of Review

"Summary judgment is appropriate when there is no genuine issue of

material fact that is in dispute and, at trial, the parties would be entitled to

judgment as a matter of law." Fitzgerald v. Hutchins, 2009 ME 115, err 9, 983 A.2d

382. "An issue is genuine if there is sufficient evidence supporting the claimed

factual dispute to require a choice between the differing versions; an issue is

material if it could potentially affect the outcome of the matter." Brown Dev. Corp.

v. Hemond, 2008 ME 146, err 10, 956 A.2d 104.

2. Statements of Material Fact

The parties have made this case unnecessarily complicated because of the

way they have filed their statements of material fact. Under Rule 56,

A motion for summary judgment shall be supported by a separate, short, and concise statement of material facts, set forth in numbered paragraphs, as to which the moving party contends there is no genuine issue of material fact to be tried. Each fact asserted in the statement shall be set forth in a separately numbered paragraph and shall be supported by a record citation .... "

M.R. Civ. P. 56(h)(1). "A court need not consider additional facts when ... they

are improperly commingled in the nonmoving party's paragraphs responding to

the moving party's material facts." Doyle v. Dep't of Human Servs., 2003 ME 61, err

11, 824 A.2d 48.

Plaintiff filed its opposing statements of material fact, which it also

intended to serve as its statements of material fact for the purposes of its cross-

motion for summary judgment. Plaintiff also filed some additional statements of

material fact. Defendants only replied to the additional statements of material

fact, as if there was no cross-motion. In addition, some of plaintiff's statements of

5 material fact span multiple pages. (See Pl.'s Opp. S.M.F.

paragraph responses do not allow for a direct reply admitting, denying, or

qualifying the facts. The Court will not consider plaintiff's opposing facts as

supporting facts for its cross-motion; it will consider the opposing facts for the

purposes of defendants' motion for summary judgment.

3. 2000 Proposal

Under Section 8(a) of the Declaration, the Declaration may be amended

"only in accordance with the Procedures specified in Section 1602-117 of the

[Condominium] Act and [the] Declaration." Altering the boundaries of any unit

in the Association requires the consent of all unit owners. (Defs.' Supp. S.M.F.

4; Eddleston Aff., Ex. 2.) Thus, the parties do not dispute that all of the owners in

the Association were required to approve an amendment to the Declaration. The

issue is whether that approval was in fact obtained at the September 3, 2000

meeting.

According to defendants, the amendment was approved. (Defs.' Supp.

S.M.F.

Declaration because there was no text of the amendment before the Association's

members. (Pl.'s Opp. S.M.F.

genuine issue of material fact regarding whether the Association's members

properly approved the 2000 proposal.

4. Joinder

Defendants argue that plaintiff's complaint should be dismissed because

plaintiff failed to join indispensable parties, specifically the other unit owners in

the Association. M.R. Civ. P. 19(a). Defendants raised this same argument in their

6 motion to dismiss. Although the Court did not specifically address the joinder

issue, the motion to dismiss was denied.

Under Maine's Condominium Act, the Association is empowered to sue

on behalf of individual unit owners. 33 M.R.S. § 1603-102(a)(4) (2013). Thus, the

other unit owners are represented in this suit. If the unit owners do not agree

with the way the Association is handling the case, they can vote for a new

Executive Board and change course. Alternatively, they could intervene.

5. Waiver/Estoppel

Defendants argue that the Association either waived or should be

estopped from asserting its claim in this case. They argue that the amendment

was approved in 2000, the minutes of the meeting where the amendment was

approved were adopted, rules were adopted based on the amendment, and that

prospective purchasers were told about the amendment. Thus, they argue that

the Association treated the amendment as valid for over 12 years.

Plaintiff counters that nobody actually believed that the vote in September

2000 was amending the Declaration. Thus, none of the unit owners would have

any reason to scrutinize the minutes from that meeting or analyze any of the

rules that were passed by the Executive Board regarding additions. Moreover,

they dispute whether prospective buyers were told about the "2000

amendment."

"Waiver is the voluntary and knowing relinquishment of a right and may

be shown by a course of conduct signifying a purpose not to stand on a right,

and leading, by a reasonable inference, to the conclusion that the right in

question will not be insisted upon." Dep't of Health and Human Servs. v. Pelletier,

2009 ME 11, Cfi 16, 964 A.2d 630 (quoting Dep't of Human Servs. v. Bell, 1998 ME

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123, err 6, 711 A.2d 1292). "Equitable estoppel precludes a party 'from asserting

rights which might perhaps have otherwise existed, ... against another person

who has in good faith relied upon such conduct, and has been led thereby to

change his position for the worse, and who on his part acquires some

corresponding right."' Id. at err 17 (quoting Waterville Homes, Inc., v. Maine Dep't of

Transp., 589 A.2d 455, 457 (Me. 1991). The parties' competing factual descriptions

demonstrate that there is a genuine issue of material fact as to whether the

Association waived or is estopped from challenging the amendment.

6. Immunity

Defendants also argue that they are entitled to summary judgment on

plaintiff's complaint because they were acting in their capacity as Executive

Board members when they recorded the 2000 amendment. Section 12(a)(ii) of the

Declaration provides:

The members of the Executive Board ... [s]hall not be liable to the Unit Owners as a result of the performance of the Executive Board members' duties, for any mistake of judgment, negligent or otherwise, except for the Executive Board members' own willful misconduct or gross negligence.

The Maine Nonprofit Corporation Act similarly states that an officer of a

corporation is not liable to the corporation if the officer acted in "good faith." 13-

B M.R.S. § 720 (2013).

Plaintiff alleges that Moseley and Eddleston were specifically advised by

their former attorney that there was not an effective amendment in 2000. (Pl.'s

Opp. err 21.) Acting on this advice, defendants attempted to have the

Association's members vote on new amendments that would allow for additions

to the freestanding units. When that plan failed, they filed the certificate in the

Registry of Deeds despite their knowledge that it was not an effective

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0~\ amendment. (Pl.'s Opp. 'IT 20.) These facts could support a finding that "-> ~ defendants engaged in willful misconduct or gross negligence. II According to defendants, they were acting in good faith to perfect the

amendment that they believed was validly adopted in 2000. (Defs.' Supp. S.M.F.

'IT 33.) Accordingly, there is a genuine issue of material fact regarding whether

defendants are entitled to immunity.

7. Counterclaim for Legal Fees

Defendants are entitled to costs and fees only if they did not engage in

willful misconduct or gross negligence. As discussed above there is a question of

material fact on this issue.

The entry is:

Defendants' motion for summary judgment is DENIED. "--- !'

Plaintiff's cross-motion for summary judgment is DENIED.

Dated: '{ll ~ [I~ ~cler Justice, Superior Court

PA-Brendan Rielly Esq DA-Christopher Neagle Esq

~"· STATE OF MAINE SUPERIOR COURT CUMBERLAND, ss CIVIL ACTION DOCKET NO. Cl/.-12-4:73 ;1/ ;vN1 !, I/,. .' r- I :; ,, " ..... ,z: I~ i r )/ . VI ~--./ () . _) ' I I '

EAST SHORE BEACH CONDOMINIUM ASSOCIATION,

Plaintiff

v. ORDER ON MOTION TO DISMISS STEVEN R. EDDLESTON and DANIEL MOSELEY,

Defendants

Before the court is the defendants' motion to dismiss pursuant to M.R. Civ. P.

12(b)(6). For the following reasons, the motion is denied.

The defendants have attached to their motion thirteen exhibits, including

affidavits, deeds, parts of the plaintiff's by-laws, parts of the plaintiff's declaration of

condominium, amendment to the declaration, a meeting agenda, meeting minutes,

correspondence, and emails. In general, only the facts alleged in the complaint are

considered on a motion to dismiss. Moody v. State Lottery Comm'n, 2004 ME 20, ~ 8,

843 A.2d 43. If the court considers materials outside the pleadings, the motion is treated

as a motion for summary judgment. Id. The court may, however, consider "official

public documents, documents that are central to the plaintiff's claim, and documents

referred to in the complaint, without converting a motion to dismiss into a motion for

summary judgment when the authenticity of such documents is not challenged." Id. <[

10, citing Alternative Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001). The court treats this motion as one pursuant to Rule 12(b)(6)1 but will

consider the certificate of amendment to the declaration of the East Shore Beach

Condominiums, attached to the complaint as exhibit A, the documents referred to in the

complaint, and the by-laws submitted by the plaintiff with its memorandum.

Viewing the allegations in the complaint in the light most favorable to the

plaintiff, the complaint "sets forth elements of a cause of action or alleges facts that

would entitle the plaintiff to relief pursuant to some legal theory." In re Wage Payment

Litig., 2000 ME 162, ~ 3, 759 A.2d 217; see 33 M.R.S. §§ 1602-117(d) (2012); 33 M.R.S.

1603-102(a)(4), (15)-(17) (2012); By-laws, Art. II(A), II(K)(4), (14)-(16); Declaration, Art.

S(a), 12(a)(ii), (cf; Certificate of Amendment.

The entry is

The Defendant's' Motion to Dismiss is DENIED.

.. Date: May 29, 2013 Nancy Mills Justice, Superior C

1 If the defendants intended that the court consider thirteen exhibits, a motion for summary judgment should have been filed, along with a supporting statement of material facts. See M.R. Civ. P. 56(h)(l). The procedure provided by Rule 56 significantly aids the court's determination of the existence of disputed material facts and application of law to those facts. See M.R. Civ. P. 56(h)(l)-( 4). 2 The court relies on the plaintiff's description of article 12(c) of the declaration. This part of the declaration is not attached to the Eddleston affidavit. (Pl.'s Mem. at 7.)

2 EAST SHORE BEACH CONDOMINIUM ASSOCIATION VS STEVEN R EDDLESTON ET AL UTN:AOCSsr -2012-0111640 CASE #:PORSC-CV-2012-00473

01 0000001074 NEAGLE, CHRISTOPHER S 511 CONGRESS ST PO BOX 9711 PORTLAND ME 04104-5011 F STEVEN R EDDLESTON DEF RTND 12/14/2012 F DANIEL MOSELEY DEF RTND 12/14/2012

02 0000008401 RIELLY BRENDAN 10 FREE STREET PO BOX 4510 PORTLAND ME 04112 F EAST SHORE BEACH CONDOMINIUM ASSOCIATION PL RTND 11/16/2012