Evergreen Highlands Ass'n v. West

73 P.3d 1, 2003 WL 21373175
CourtSupreme Court of Colorado
DecidedJune 16, 2003
Docket02SC242
StatusPublished
Cited by123 cases

This text of 73 P.3d 1 (Evergreen Highlands Ass'n v. West) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Evergreen Highlands Ass'n v. West, 73 P.3d 1, 2003 WL 21373175 (Colo. 2003).

Opinions

Justice RICE

delivered the Opinion of the Court.

I. INTRODUCTION

We granted certiorari in this case to determine whether, pursuant to the modification [2]*2clause of the Evergreen Highlands Subdivision covenants, the requisite majority of lot owners may "change or modify" the existing covenants by the addition of a new covenant which: (1) requires all lot owners to be members of the homeowners association, (2) assesses mandatory dues on all lot owners in the subdivision to pay for the maintenance of common areas, and (8) imposes liens on those lots whose owners fail to pay the mandatory dues.

The district court held that such an amendment was valid and binding. The court of appeals reversed, finding that the modification clause of Evergreen Highlands' covenants did not allow for the addition of a wholly new covenant, but only for the modification of existing covenants. We now reverse the court of appeals, holding that the addition of a new covenant falls within the permissible scope of the modification clause of the Evergreen Highlands covenants.

We also granted certiorari on the related question of whether, in the absence of a covenant imposing mandatory dues, the homeowners association has the implied power to collect assessments from all lot owners to pay for the maintenance of common areas of the subdivision. Although Petitioner counterclaimed on this issue in the trial court, the court never reached the merits of the argument because it upheld the actual modification of the covenant; the court of appeals reversed on the same ground. The issue was nevertheless preserved for certio-rari review, and we now hold that the declarations for Evergreen Highlands were sufficient to create a common interest community by implication with the concomitant power to impose mandatory dues on lot owners to pay for the maintenance of common areas of the subdivision. We accordingly remand the issue to the court of appeals with orders to return it to the trial court for calculation of Petitioner's damages in a manner consistent with this opinion.

II. FACTS AND PROCEDURAL HISTORY

Petitioner Evergreen Highlands Association, a Colorado non-profit corporation ("As- > sociation"), is the homeowner association for Evergreen Highlands Subdivision-Unit 4 ("Evergreen Highlands") in Jefferson County. The subdivision consists of sixty-three lots, associated roads, and a 22.3 acre park area which is open to use by all residents of the subdivision. The Association holds title to and maintains the park area, which contains hiking and equestrian trails, a barn and stables, a ball field, a fishing pond, and tennis courts. The park area is almost completely surrounded by private homeowners' lots, with no fence or other boundary separating the park area from the homes. Respondent Robert A. West owns one of the lots bordering directly on the park area, and has used the facilities there to play tennis, fish, and walk his dog.

Evergreen Highlands Subdivision was created and its plat filed in 1972. The plat indicated that the park area was to be conveyed to the homeowners association. Protective covenants for Evergreen Highlands were also filed in 1972, but did not require lot owners to be members of or pay dues to the Association. The Association, however, was incorporated in 1978 for the purposes of maintaining the common area and facilities, enforcing the covenants, paying taxes on the common area, and determining annual fees. The developer conveyed the park area to the Association in 1976. Between the years of 1976 and 1995, when the modification of the covenants at issue in this case occurred, the Association relied on voluntary assessments from lot owners to pay for maintenance of and improvements to the park area. Such expenses included property taxes, insurance for the park area and its structures, weed spraying, tennis court resurfacing, and barn and stable maintenance.

Article 13 of the original Evergreen Highlands covenants provides that a majority of lot owners may agree to modify the covenants, stating in relevant part as follows:

[TJhe owners of seventy-five percent of the lots which are subject to these covenants may release all or part of the land so restricted from any one or more of said restrictions, or may change or modify any one or more of said restrictions, by executing and acknowledging an appropriate agreement or agreements in writing for [3]*3such purposes and filing the same in the Office of the County Clerk and Recorder of Jefferson County, Colorado.

Protective Covenants for Evergreen Highlands-Unit 4, art. 183 (Nov. 6, 1972) (emphasis added) (hereinafter "modification clause"). In 1995, pursuant to the modification clause, at least seventy-five percent of Evergreen Highlands' lot owners voted to add a new Article 16 to the covenants. This article required all lot owners to be members of and pay assessments to the Association, and permitted the Association to impose liens on the property of any owners who failed to pay their assessment. Assessments were set at fifty dollars per year per lot.

Respondent purchased his lot in 1986 when membership in the Association and payment of assessments was voluntary, a fact that Respondent contends positively influenced his decision to purchase in Evergreen Highlands. Respondent was not among the majority of homeowners who approved the 1995 amendment to the covenants, and he subsequently refused to pay his lot assessment. When the Association threatened to record a lien against his property, Respondent filed this lawsuit challenging the validity of the 1995 amendment. The Association counterclaimed for a declaratory judgment that it had the implied power to collect assessments from all lot owners in the subdivision, and accordingly sought damages from West for breach of the implied contract.1 The district court ruled in favor of the Association on the ground that the amendment was valid and binding; therefore, it never reached the merits of the Association's counterclaims.

The court of appeals reversed, finding that the terms "change or modify" as set forth in the modification clause of the covenants did not allow for the addition of a wholly new covenant, but only for modifications to the existing covenants. The court examined two divergent lines of cases from other states and concluded that the particular language used in Evergreen Highlands' modification clause supported the more restrictive interpretation, based on the principle that courts should resolve any ambiguities in covenant language in favor of the free and unrestricted use of property. West v. Evergreen Highlands Ass'n, 55 P.3d 151, 154 (Colo.App.2001). The court of appeals did not address the issue of whether the Association had the implied power to collect assessments from lot owners, and therefore whether Respondent was in breach of an implied contract. We granted certiorari2 and now reverse and remand.

III, ANALYSIS

Interpretation of a covenant is a question of law requiring de novo review. Buick v. Highland Meadow Estates at Castle Peak Ranch, Inc., 21 P.3d 860, 862 (Colo.2001). Courts must construe covenants as a whole based upon their underlying purpose, but will enforce a covenant as written if clear on its face. Id.

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Cite This Page — Counsel Stack

Bluebook (online)
73 P.3d 1, 2003 WL 21373175, Counsel Stack Legal Research, https://law.counselstack.com/opinion/evergreen-highlands-assn-v-west-colo-2003.