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McShane v. Stirling Ranch Property Owners Association, Inc.

Supreme Court of Colorado

May 1, 2017

Mac McShane and Cynthia Calvin, Petitioners:
Stirling Ranch Property Owners Association, Inc. Respondent:

         Certiorari to the Colorado Court of Appeals Court of Appeals Case No. 14CA248

          Attorneys for Petitioners: Neiley Law Firm, LLC Richard Y. Neiley, Jr. Richard Y. Neiley, III

          Attorneys for Respondent: Hall & Evans, L.L.C. Alan Epstein Lance G. Eberhart Timothy M. Murphy

          HOOD JUSTICE

         ¶1 Petitioners Mac McShane and Cynthia Calvin had once hoped to build a multistory home overlooking the Roaring Fork Valley near Carbondale. After belatedly discovering their design for that home exceeded Garfield County height regulations, however, they ended up with something less: a one-story home and an attached "pod." Making the required changes proved costly.

         ¶2 Today, we decide whether McShane and Calvin can seek to assign any of those costs to the Stirling Ranch Property Owners Association ("POA"), which they allege improperly approved the faulty architectural plans and then later improperly denied approval of revised plans as well. Because the plain language of the declaration and design guidelines governing Stirling Ranch properties does not limit the POA's liability, and the POA cannot benefit from exculpatory clauses protecting its boards and agents, we conclude McShane and Calvin may bring their claims.

         I. Facts and Procedural History

         ¶3 Mac McShane and his wife Cynthia Calvin (collectively, "the Owners") purchased a lot in Stirling Ranch, a planned unit development in Garfield County, seeking to build a home atop a bluff surveying the Roaring Fork Valley.

         ¶4 Their conflict with the POA concerns the rules and regulations governing properties in that community, including the Second Amended and Restated Declaration of Covenants, Conditions, Restrictions and Easements for Stirling Ranch, P.U.D. ("Declaration"). The Owners' lot is subject to the Declaration. The Declaration created the POA. Each lot owner within Stirling Ranch is a member of the POA. The POA is in turn governed by the Executive Board, which appoints the Design Review Board ("DRB").

         ¶5 The DRB promulgated and enforced the Stirling Ranch Design Guidelines ("Design Guidelines") intended to preserve "the Ranch's unique character, . . . natural beauty and . . . the quality of open space." Under those guidelines, all improvements require DRB approval to proceed. And to win DRB approval, the improvements must comply with both the Design Guidelines and Garfield County height restrictions.

         ¶6 After first submitting plans to the DRB in 2010, the Owners sought approval of them in earnest in 2011. Their architect drafted a cover sheet to accompany those plans, and in it he averred that the house would comply with Garfield County height restrictions. "This, " the trial court noted, "later proved to be incorrect."

         ¶7 Relying in part on the representation in the cover sheet, the DRB granted final design approval for the multistory home, and the Owners began building. Construction proceeded without issue until December 2011, at which point the neighboring lot owners returned from a vacation to find the Owners' partly finished garage spoiling their view. As members of both the Executive Board and the DRB were working to resolve that issue, Garfield County learned the house would exceed its height restrictions and issued a stop-work order. Work stopped.

         ¶8 In the months that followed, the Owners secured a new architect who revised the design but retained a second story. Garfield County approved those plans, but the DRB and Executive Board did not. After another round of redesigns, in which the multistory proposal became a single-story design with an attached "pod, " the DRB approved the plans, and the Owners built the home as designed.

         ¶9 Because the Owners blamed the POA for the costs associated with the single- story conversion, they filed suit. The Owners pursued declaratory judgment/equitable estoppel and negligence claims against the POA, alleging more than $260, 000 in damages. Pointing to two exculpatory clauses, one in the Declaration and another in the Design Guidelines, the POA argued those claims were barred.

         ¶10 The clause in the Declaration provided as follows:

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 consultants will be responsible in any way for any defects in any plans or specifications submitted, revised or approved in accordance with the provisions of the Association Documents, nor for any structural or other defects in any work done according to such plans and specifications. In all events the Design Review Board will be defended and indemnified by the Association in any such suit or proceeding, which may arise by reason of the Design Review Board's decisions.

         ¶11 Section II.D of the Design Guidelines[1] contained the following exculpatory provision:

Neither the DRB nor any member of the DRB will be liable to the POA, any owner or any other person for any damage, loss or prejudice ...

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