DeJean v. Grosz
2015 COA 74
Colo. Ct. App.2015Background
- Teresa Schiff (Declarant) recorded a condominium Declaration in 1994 for a two-unit Lake View Townhomes Condominium (LVTC) that: (1) contemplated a unit owners' association under CCIOA, (2) made membership automatic and appurtenant to each unit, and (3) stated covenants run with the land.
- The Association contemplated by the Declaration was not incorporated by the Declarant before sale of units.
- Grosz bought Unit A in 1995; the DeJeans bought Unit B in 2000. They informally managed common areas until relations broke down.
- In March 2013 Grosz unilaterally incorporated the Association, noticed meetings, adopted bylaws without DeJeans' participation, and acted on the Association's behalf.
- The DeJeans sued seeking declaratory relief, injunctions, and dissolution, asserting they lacked notice/consent to incorporation; the trial court issued a preliminary injunction enjoining Grosz/Association from transacting business.
- The court of appeals vacated the preliminary injunction, holding that the Declaration’s language put purchasers on notice and the right to form the Association runs with the land, so the DeJeans lacked a reasonable probability of success on the merits.
Issues
| Issue | Plaintiff's Argument (DeJean) | Defendant's Argument (Grosz) | Held |
|---|---|---|---|
| Whether unit owner may incorporate the Association after Declarant failed to do so | Declarant’s failure to incorporate means Grosz could not unilaterally create a binding mandatory association without DeJeans' consent | Declaration contemplated an Association; purchasers had notice and automatically consented to membership when they bought units | Owner may incorporate; right to form association runs with the land; DeJeans had notice and consented on purchase |
| Whether DeJeans had notice and consent to mandatory membership | No effective consent because association did not exist at time DeJean purchased Unit B | Declaration's automatic-membership and run-with-land language provided constructive notice at purchase | Purchasers were on notice; membership and obligation to association run with the land |
| Whether § 38-33.3-301 required incorporation by Declarant or consent before later formation | Statute requires association organized no later than conveyance of first unit; thus later incorporations without consent are invalid | Section aims to encourage associations and govern declarant-original owner relations; it does not bar later formation by an owner when declaration contemplates an association | § 38-33.3-301 does not preclude later incorporation by a unit owner where the Declaration contemplates an association; statute interpreted in context of CCIOA's pro-association purpose |
| Whether Grosz (prevailing on appeal) is entitled to attorney fees now | DeJeans: Grosz must prevail on the litigation as a whole to be awarded fees under § 38-33.3-123(1)(c) | Grosz: as prevailing party on appeal, she should recover fees and costs for trial and appeal | No fees awarded at this stage; no prevailing party yet because merits not adjudicated |
Key Cases Cited
- Evergreen Highlands Ass'n v. West, 73 P.3d 1 (Colo. 2003) (declaration language can create a common-interest community by implication)
- Bordelon v. Homeowners Ass'n of Lake Ramsey, Inc., 916 So.2d 179 (La. Ct. App. 2005) (developer's covenants requiring membership put subsequent purchasers on notice and do not preclude later formation of an association)
- Griffin v. Tall Timbers Dev., Inc., 681 So.2d 546 (Miss. 1996) (covenants stating they run with the land support later formation of mandatory homeowners' association)
- Rathke v. MacFarlane, 648 P.2d 648 (Colo. 1982) (standards and caution for granting preliminary injunctions)
- Lakeview Assocs., Ltd. v. Maes, 907 P.2d 580 (Colo. 1995) (when facts undisputed, legal effect is reviewed de novo)