One Pacific Towers Homeowners' Ass'n v. HAL Real Estate Investments, Inc.

108 Wash. App. 330
CourtCourt of Appeals of Washington
DecidedSeptember 4, 2001
DocketNo. 46815-4-I
StatusPublished
Cited by17 cases

This text of 108 Wash. App. 330 (One Pacific Towers Homeowners' Ass'n v. HAL Real Estate Investments, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
One Pacific Towers Homeowners' Ass'n v. HAL Real Estate Investments, Inc., 108 Wash. App. 330 (Wash. Ct. App. 2001).

Opinion

Cox, J.

At issue in this case of first impression is whether a holding corporation, its subsidiaries, and others were “declarants” or “dealers” under the Washington Condominium Act1 for certain sales. If they were, the Condominium Act required that they provide their purchasers with public offering statements. We must also decide whether the trial court properly exercised its discretion in assessing attorney fees against the One Pacific Towers Homeowners’ Association and the plaintiff condominium purchasers (collectively, Owners) who brought this action.

Because the holding corporation and its subsidiaries did “succeed to” special declarant rights under the circumstances of this case, they were “declarants” under the Condominium Act. Thus, they were required to prepare and deliver public offering statements to the purchasers who bought condominium units from them. Accordingly, we reverse the trial court’s decision to the extent that it concluded otherwise.

We further hold that the Owners have not shown that the [336]*336holding corporation, its subsidiaries, or any other respondent had the “right to acquire” six or more condominium units. Thus, they were not “dealers” under the condominium act. We further hold that the facts of this case do not warrant piercing the corporate veil of any corporate entity or otherwise imposing personal liability. Based on these conclusions, we affirm the trial court’s decision to the extent that it is consistent with these holdings.

Finally, we hold that the trial court erred by assessing attorney fees against the Owners and denying their request for such fees. Accordingly, we reverse the fee award, and award fees for the proceedings below and on appeal to the Owners. We remand to the trial court for it to determine the reasonable amount of such fees and to conduct such further proceedings that are not inconsistent with this opinion.

One Pacific Towers is a 75-unit condominium development in downtown Seattle. OPT-1 Limited Partnership (Limited Partnership), whose general partner was Vyzis Residential Properties, Inc., was the developer and original declarant of the development. Basil Vyzis was the principal of the corporate general partner.

After Vyzis died, a representative of his estate approached HAL Real Estate Investments, Inc. (HAL), to see if it would be interested in purchasing 30 unsold residential units of the development, together with a commercial unit and the entire parking garage. HAL formed a holding corporation, OPT Holdings, Inc., to assist in the purchase. OPT Holdings then created six subsidiaries, OPT II through OPT VII, each of which had the sole purpose of purchasing and reselling five condominium units. Each subsidiary executed, as purchaser, a residential purchase agreement with the Limited Partnership, as seller, to purchase five residential condominium units. OPT Holdings, Inc., executed an agreement with the Limited Partnership to purchase one commercial unit and the entire parking garage of the development. Thus, OPT Holdings, Inc., and its six subsidiaries (collectively, the OPT entities) purchased, at closing, the 30 unsold residential condo[337]*337minium units plus a commercial unit and the parking garage.

Paul Manheim is the sole officer and director of HAL and the OPT entities. Neither Manheim nor any of his corporate entities is related either to OPT-1 Limited Partnership or to any of its affiliates.

Prior to closing of the sales transaction, the Limited Partnership and the OPT entities executed a Supplemental Agreement. It provided, among other things, that the Limited Partnership would not “transfer or exercise” any special declarant rights until the OPT entities authorized such “transfer or exercise.” The Supplemental Agreement further provided that the OPT entities could direct the Limited Partnership to assign to them “the Special Declarant Rights to maintain sales offices, erect signage, and operate model units.” In June 1997, after the closing of the sales and pursuant to direction by the OPT entities, the Limited Partnership transferred the special declarant rights directly to the Homeowners Association. At no time did the Limited Partnership ever transfer such rights to the OPT entities.

In the months that followed closing of the sales from the Limited Partnership to the OPT entities, OPT II through OPT VII operated two model units at One Pacific Towers, one of which contained a sales office. These same entities also made improvements to the lobby and common areas, and hired an interior design firm to help finish the remaining units that they owned. In addition, OPT II through VII hired a marketing firm to help advertise and sell their condominium units. They also maintained signs advertising condominium units for sale at One Pacific Towers.

OPT II through VII provided resale certificates, not public offering statements, to their purchasers.

In September 1999, the Owners commenced this declaratory judgment action against the OPT entities and others for statutory penalties based on the failure to provide public offering statements. The Owners also sought attorney fees. [338]*338They claimed that the OPT entities and others were “declarants” and/or “dealers” under the Condominium Act; were required to provide purchasers with public offering statements, not just resale certificates; and were liable for statutory penalties under the Condominium Act. On cross-motions for summary judgment, the trial court concluded that none of the respondents was either a “declarant” or a “dealer.” Thus, the court determined they had no obligation to prepare or deliver to any purchaser a public offering statement. The trial court later awarded $73,894 in attorney fees pursuant to RCW 64.34.455 against the Owners.

The Owners appeal.

Declarant Liability

The Owners argue that HAL and the OPT entities did “succeed to” and “reserve” special declarant rights, and thus had an obligation to provide public offering statements to their purchasers. We hold that the OPT entities did succeed to special declarant rights by the control and exercise of those rights. Because they “succeeded to” special declarant rights, they had the duty to prepare and provide public offering statements to their purchasers.

We may affirm an order granting summary judgment if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.2 We consider all facts and reasonable inferences in the light most favorable to the nonmoving party.3 We review questions of law de novo.4

Here, the facts are largely undisputed, and there are no genuine issues of material fact. Thus, our task is to determine whether any moving party is entitled to judgment as a matter of law.

[339]*339RCW 64.34.405(1) requires that a declarant provide purchasers with a public offering statement. The statute states that:

Except as provided in subsection (2) of this section or when no public offering statement is required, a declarant

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Bluebook (online)
108 Wash. App. 330, Counsel Stack Legal Research, https://law.counselstack.com/opinion/one-pacific-towers-homeowners-assn-v-hal-real-estate-investments-inc-washctapp-2001.