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Hauer v. McMullin

Court of Appeals of Colorado, First Division

July 2, 2015

John Hauer, individually and on behalf of the homeowners association of Two Rivers Estates; Sena Hauer, individually and on behalf of the homeowners association of Two Rivers Estates; Lincoln Trust FBO John Hauer; Joseph Conrado; and Kelly Conrado; Plaintiffs-Appellees,
v.
Crea J. McMullin and Martha E. McMullin, Defendants-Appellants, and David R. Medina, Attorney-Appellant.

Rio Blanco County District Court No. 11CV58 Honorable James B. Boyd, Judge

Law Office of Leigh H. Singleton, LLC, Leigh H. Singleton, Denver, Colorado, for Plaintiffs-Appellees John Hauer and Sena Hauer

Lettunich & Vanderbloemen, LLC, John A. Vanderbloemen, Steamboat Springs, Colorado, for Plaintiffs-Appellees Joseph Conrado and Kelly Conrado

David Medina, Wheat Ridge, Colorado, for Defendants-Appellants

OPINION

TAUBMAN JUDGE

¶ 1 Defendants, Crea J. and Martha E. McMullin (the McMullins), appeal the trial court's judgment quieting title to seventeen acres of Common Open Space (COS) in plaintiffs, John and Sena Hauer (the Hauers), individually and on behalf of the homeowners association of Two Rivers Estates (Two Rivers HOA). The McMullins and their attorney, David R. Medina, appeal the award of attorney fees against them in connection with two motions to compel. Because we agree with the trial court's conclusion that the recorded final plat, the deeds, and the subdivision agreement established an implied common interest community and an unincorporated homeowners association, we affirm on the principal issue raised in this appeal, as well as the trial court's attorney fee orders.

I. Background

¶ 2 In 1998, the McMullins purchased a thirty-acre tract of land overlooking the White River in Meeker, Colorado with the intention of developing a subdivision. In 2001, the Board of County Commissions of Rio Blanco County approved the McMullins' final plat, identifying the property as Two Rivers Estates and creating seven lots and seventeen acres of COS. Over the next eight years, the McMullins were unable to sell any of the property's seven lots.

¶ 3 In 2003, the McMullins mortgaged six of the seven lots to finance the construction of a family lodge on one of the lots. However, they did not mortgage or encumber the seventeen acres of COS.

¶ 4 In 2010, financial hardship forced the McMullins to sell all seven lots to three different owners. As a result, the Hauers own lots one and three; plaintiffs, Joseph and Kelly Conrado (the Conrados) own lot two; and plaintiff, Lincoln Trust FBO John Hauer (Lincoln Trust), owns lots four through seven, (collectively the lot owners).

¶ 5 In 2011, the Hauers and Lincoln Trust filed a complaint individually and on behalf of the unincorporated Two Rivers HOA to quiet title to their respective lots. They also sought to quiet title to the COS in the Two Rivers HOA. With regard to the COS, the Hauers asserted that various recorded documents, including the final plat and the subdivision agreement, constituted declarations sufficient to create a common interest community by implication, and that the unincorporated Two Rivers HOA holds title to the COS. The McMullins counterclaimed, asserting that they hold title to the COS because a common interest community was never formally created and because they never conveyed the COS property.

¶ 6 Relying on Evergreen Highlands Ass'n v. West, 73 P.3d 1 (Colo. 2003), the trial court found that a common interest community had been created by implication. In a detailed opinion, the court concluded that a membership in an unnamed homeowners association was appurtenant to each lot in the subdivision, and that the declarations placed ownership of the seventeen acres of COS in the unnamed association.

II. Common Interest Community Through Implication

¶ 7 The McMullins contend that the trial court erred when it quieted title to the COS in the unincorporated Two Rivers HOA. Specifically, they contend that the court erred when it concluded that recorded documents, including the final plat and subdivision agreement, constituted the declarations necessary to form a common interest community under the Colorado Common Interest Ownership Act (CCIOA). See § 38-33.3-103(8), C.R.S. 2014. We disagree.

A. Standard of Review

¶ 8 Whether a common interest community exists under CCIOA is a question of statutory interpretation that we review de novo. Hiwan Homeowners Ass'n v. Knotts, 215 P.3d 1271, 1273 (Colo.App. 2009). We interpret statutes to give effect to the General Assembly's intent, giving the words in the statute their plain and ordinary meanings. Platt v. Aspenwood Condo. Ass'n, 214 P.3d 1060, 1063 (Colo.App. 2009). Further, we interpret statutes as a whole, giving effect to all of their parts. Wolf Creek Ski Corp. v. Bd. of Cnty. Comm'rs, 170 P.3d 821, 825 (Colo.App. 2007).

B. Applicable Law

¶ 9 CCIOA establishes a "clear, comprehensive, and uniform framework for the creation and operation of common interest communities." § 38-33.3-102(1)(a), C.R.S. 2014. It defines common interest communities as "real estate described in a declaration with respect to which a person, by virtue of such person's ownership of a unit, is obligated to pay for real estate taxes, insurance premiums, maintenance, or improvement of other real estate described in a declaration." § 38-33.3-103(8). This assessment obligation is a necessary attribute of a common interest community. See Restatement (Third) of Property: Servitudes § 6.2(1) (2000) (defining common interest communities as real estate developments in which individual lots are burdened by a servitude imposing an obligation to contribute to the maintenance of the common property).

¶ 10 A "declaration" for the purposes of CCIOA is "any recorded instruments, however denominated, that create a common interest community, including any amendments to those instruments and also including, but not limited to, plats and maps." § 38-33.3-103(13); see Hiwan, 215 P.3d at 1273 ("[W]e agree with the district court that [CCIOA's] reference to a 'declaration' includes the plats and maps of the Hiwan subdivision and the covenants, all of which were properly recorded."); see also § 38-33.3-205(1), C.R.S. 2014 (listing the required contents of a declaration, including identifying information and land use restrictions within the common interest community).

¶ 11 In Evergreen Highlands, the supreme court held that a common interest community's assessment obligation can be implied. 73 P.3d at 7. First, the court determined that Evergreen Highlands's declaration existed throughout several recorded documents. Id. at 9. Those documents included the planned community's covenants; a plat, which noted that a park area would be conveyed to the homeowners association; a deed whereby the developer of the community quitclaimed the community's park to the homeowners association; and the homeowners association's articles of association, which required it to "own, acquire, build, operate, and maintain" the common area and facilities, to pay taxes on them, and to "determine annual membership or use fees." Id.

¶ 12 Second, the Evergreen Highlands court relied on the Restatement of Property to conclude that a common interest community may be created by implication. Id. (citing Restatement (Third) of Property: Servitudes § 6.2 cmt. a ("An implied obligation may . . . be found where the declaration expressly creates an association for the purpose of managing common property or enforcing use restrictions and design controls, but fails to include a mechanism for providing the funds necessary to carry out its functions.")). The Evergreen Highlands's declarations expressly established a homeowners association, conveyed to it the development's common property, charged it with maintaining the common property, and granted it authority to determine annual membership or use fees. Id. The court concluded that the declarations were sufficient to create a common interest community by implication. Id.

¶ 13 Similarly, in Hiwan, a division of this court held that declarations allowing a homeowners association to collect mandatory assessments for maintenance and improvements created a common interest community even though there was no common property in the subdivision. 215 P.3d at 1274-77. The division reasoned that Hiwan was a common interest community because an owner of a unit was obligated by the declarations to pay for maintenance and improvements of another's real estate. Id.

C. Analysis

¶ 14 The issue here is whether the recorded final plat, the deeds, and the subdivision agreement satisfy CCIOA's requirement that common interest communities be formed by an assessment obligation described in a declaration. We conclude that they do.

ΒΆ 15 First, the recorded final plat for the Two Rivers Estates subdivision included a map outlining the seventeen acres of COS. The notes and notices on the final plat stipulated that the common property was to be maintained by an unnamed homeowners association. Plat Notice No. 1 stipulated that a "private access road" on the property was "the responsibility of the homeowners association." Plat Notice No. 2 stated that "domestic wells" on the property were "the responsibility of the homeowners association." Plat Notice No. 8 provided generally that "common ownership and maintenance [were] by the ...


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