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McShane v. Stirling Ranch Property Owners Association, Inc.

Court of Appeals of Colorado, Fourth Division

April 23, 2015

Mac McShane and Cynthia Calvin, Plaintiffs-Appellants,
v.
Stirling Ranch Property Owners Association, Inc., Defendant-Appellee.

Garfield County District Court No. 12CV148 Honorable Denise K. Lynch, Judge

Neiley Law Firm, LLC, Richard Y. Neiley, Jr., Richard Y. Neiley III, Glenwood Springs, Colorado, for Plaintiffs-Appellants

Hall & Evans, LLC, Alan Epstein, Lance G. Eberhart, Timothy M. Murphy, Denver, Colorado, for Defendant-Appellee

OPINION

HAWTHORNE JUDGE.

¶ 1 Plaintiffs, Mac McShane and Cynthia Calvin, appeal the trial court's judgment in favor of defendant, Stirling Ranch Property Owners Association, Inc. (POA). We affirm.

I. Facts and Procedural History

¶ 2 Plaintiffs purchased a lot in Stirling Ranch intending to construct a residential home. The lot was subject to the Second Amended and Restated Declaration of Covenants, Conditions, Restrictions and Easements for Stirling Ranch, P.U.D. (Declaration). Under the Declaration, each lot owner in the Stirling Ranch community is a member of the POA. The POA is governed by an Executive Board and the board appoints and removes members of the POA's Design Review Board (DRB). The Executive Board and the DRB are charged with enforcing the Declaration and the Stirling Ranch Design Guidelines (Design Guidelines). Thus, these two components - the governing/administrative boards and the membership - constitute the POA.

¶ 3 Before plaintiffs began construction, they were required to submit design plans from a licensed architect to receive the DRB's approval. The Design Guidelines require designs to conform to Garfield County's height requirements. Plaintiffs' architect mistakenly represented to the DRB that the designs complied with these requirements, and the DRB did not notice a failure to meet them. So, the DRB approved plaintiffs' initial designs.

¶ 4 Plaintiffs then began construction. The county issued a stop work order when it learned that the home exceeded its building height requirements. As a result, plaintiffs stopped construction and had to redesign their home.

¶ 5 Plaintiffs submitted redesigned plans to the DRB complying with the county's height requirements. The DRB rejected the plans because, according to the DRB, they did not otherwise comply with the Design Guidelines. Plaintiffs later submitted a second set of redesign plans removing the home's second story and the DRB approved these plans.

¶ 6 Plaintiffs ultimately brought three claims against the POA. They alleged that the redesign of their home caused them $261, 565.97 in damages. The trial court concluded that the POA had not breached its fiduciary duty and that the Declaration's Limitation of Liability section and the Design Guideline's NonLiability section (the exculpatory clauses) barred plaintiffs' claims for declaratory judgment/equitable estoppel and negligence.

II. Exculpatory Clauses

¶ 7 Plaintiffs assert that the court erred in concluding that the exculpatory clauses barred their claims against the POA for declaratory judgment/equitable estoppel and negligence. We disagree.

A. Standard of Review

¶ 8 The scope and validity of an exculpatory clause are questions of law. See B & B Livery, Inc. v. Riehl, 960 P.2d 134, 136 (Colo. 1998). We review a question of law de novo. Wycoff v. Grace Cmty. Church of Assemblies of God, 251 P.3d 1260, 1264 (Colo.App. 2010) (reviewing de novo an exculpatory clause's validity). B. Exculpatory Provisions and Applicable Law

¶ 9 The Declaration and the Design Guidelines include provisions limiting the DRB's liability. Under a section entitled "Limitation of Liability" the Declaration provides:

The Design Review Board will use reasonable judgment in accepting or disapproving all plans and specifications submitted to it. Neither the Design Review Board nor any individual Design Review Board member will be liable to any person for any official act of the Design Review Board in connection with submitted plans and specifications, except to the extent the Design Review Board or any individual Design Review Board member acted with malice or intentional wrongful acts. Approval by the Design Review Board does not necessarily assure approval by the appropriate governmental body or Garfield County. Notwithstanding that the Design Review Board has approved plans and specifications, neither the Design Review Board nor any of its members will be responsible or liable to any Owner, developer or contractor with respect to any loss, liability, claim or expense which may arise by reason of such approval of the construction of the improvements. Neither the Executive Board, the Design Review Board, nor any agent thereof, nor Declarant, nor any of its partners, employees, agents or ...

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