Bethany Marina Townhouses Phase II v. BMIG, LLC
2, 2017
Del.Oct 10, 2017Background
- Bethany Marina, Inc. recorded a Declaration (1996) creating an "expandable" condominium for 77 units in two phases; Phase One included 6 units and Phase Two comprised additional buildings/units that were expressly excepted from the Declaration and shown on Declaration Plans.
- The Declaration reserved a developer easement "to construct" the additional buildings and related ingress/egress, described as "perpetual during the continued existence" of the condominium; the unilateral annexation deadline was extended to August 29, 2010.
- Developer ownership passed through several entities and ultimately to BMIG, LLC, which owns several undeveloped parcels and eleven boat slips; BMIG began developing one remaining parcel in 2014 and the Condo Association objected.
- The Condo Association sued (Chancery → Superior Court) seeking specific performance/payment of assessments; BMIG counterclaimed seeking declaratory relief on development rights, easement validity, and ownership of five condominium features (pumping station, pump house, pool, pool house, stormwater ponds).
- Superior Court ruled BMIG may develop the eleven excluded parcels, may enforce the easement, owned the five excepted features, and must pay past and future boat-slip assessments and related collection costs; Delaware Supreme Court affirmed in part and reversed in part.
Issues
| Issue | Condo Association's Argument | BMIG's Argument | Held |
|---|---|---|---|
| Whether BMIG retained the right to develop the excepted, undeveloped parcels after the Aug. 29, 2010 annexation deadline | The deadline extinguished the developer's unilateral development rights; once expired there were no units "required" to be added, so development rights ended | Deadline only affects unilateral annexation into the condominium; BMIG may still develop the excluded land outside the condominium regime | Held for BMIG: BMIG may develop the parcels consistent with the Declaration plan; the deadline only bars unilateral annexation into the condominium without unitholder consent |
| Whether the developer's easement to construct the additional buildings remains enforceable | Easement expired when unilateral development/annexation right expired | Easement remains; it is "perpetual during the continued existence" of the condominium and is tied to development rights that persist | Held for BMIG: Easement remains in force while condominium exists and supports necessary ingress/egress; owner of easement bears maintenance obligations |
| Ownership of five features (pumping station, pump house, pool, pool house, stormwater ponds) | These features were excepted in amendments and thus belong to the developer | Features were excepted; developer therefore owns them | Mixed: reversed as to pool, pool house, and ponds — they were built on submitted condominium land before the amendment and thus belong to the condominium; pumping station/pump house ownership depends on accuracy of plan notations (notes show conveyed/removed), so ownership is not awarded to BMIG as a matter of law |
| Whether BMIG must pay past and future boat-slip assessments, fees, interest, and costs | Condo Association: settlement obligates BMIG to pay all future slip assessments and collection costs; Superior Court has jurisdiction over the legal claim | BMIG: settlement only covers assessments "due and owing under recorded documents" and Developer exemption in Code of Regulations eliminates obligation; settlement does not impose interest/fees | Held for Condo Association: Settlement language obligates BMIG to pay all future assessments; BMIG is subject to collection remedies (interest, attorneys’ fees, costs) under governing documents; Superior Court properly had jurisdiction over the legal remedy claim |
Key Cases Cited
- Town of Windham v. Lawrence Sav. Bank, 776 A.2d 730 (N.H. 2001) (discusses expandable condominium concept and developer reservation to annex land)
- Ryan James Realty, LLC v. Villages at Chester Condo. Ass’n, 893 A.2d 661 (N.H. 2006) (requirements for expandable condominium declarations and developer annexation rights)
- Council of Unit Owners of Pilot Point Condominium v. Realty Growth Investors, 436 A.2d 1268 (Del. Ch. 1981) (buildings constructed on submitted land become unit property subject to the declaration)
- Council of Dorset Condo. Apartments v. Gordon, 801 A.2d 1 (Del. 2002) (treats a condominium declaration and code of regulations as a contract under the Unit Properties Act)
- Lank v. Moyed, 909 A.2d 106 (Del. 2006) (standard of appellate review for summary judgment)
- GMG Capital Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776 (Del. 2012) (rules on contract interpretation principles to ascertain parties’ intent)