128 A.3d 383
R.I.2015Background
- In 1988 Globe (predecessor to IDC) recorded the master declaration for Goat Island South (GIS), a master condominium over three developed sub-condominiums (America, Capella, Harbor Houses) plus three undeveloped parcels; disputes arose over ownership of the undeveloped parcels and voting rights.
- Prior litigation produced two Rhode Island Supreme Court decisions: America I (2004) and America II (2005), which held that the undeveloped parcels were common elements owned by individual unit owners (subject to development rights) and invalidated certain voting procedures that excluded individual unit owners.
- Owners later adopted a Second Amended Restated Master Declaration (SAR) in 2007 reallocating common-element interests to conform with America I/II and adding a review process for Harbor Houses alterations; nearly 80% of unit owners approved the SAR.
- In 2008 plaintiffs (IDC and Roos) sued to invalidate the GIS master condominium and its declarations (original, FAR, SAR), asserting claims for declaratory relief and breach against the board; Harbor Houses later cross-claimed to invalidate the SAR.
- The Superior Court granted summary judgment for defendants dismissing all counts, finding plaintiffs’ ownership/invalidity claims barred by res judicata and estoppel by deed, upholding the SAR, rejecting individual board-member liability, and denying plaintiffs’ late amendment to rescind the SAR for mutual mistake.
- The Supreme Court affirmed, holding plaintiffs were precluded from relitigating prior issues, the SAR complied with controlling precedent and the Condominium Act, board members bore no individual liability on this record, and amendment to add mutual-mistake rescission would be futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs may relitigate ownership of common elements and validity of original/FAR declarations | IDC/Roos: issues not identical to prior America I/II; different interests now as unit owners | Defendants: claims arise from same transaction; prior adjudication and final Rule 54(b) judgment bar relitigation | Barred by res judicata (identity of parties/privity, transactional identity of issues, final judgment) |
| Whether estoppel by deed prevents plaintiffs from denying validity of prior declarations or claiming common-element title | Plaintiffs: may challenge declarations despite prior sales | Defendants: plaintiffs sold units under those declarations and warranted title; equity bars contradicting earlier deeds | Estoppel by deed applies; plaintiffs cannot now deny validity or claim title to those common elements |
| Whether the SAR is invalid (voting allocation, need for unanimous consent, failure to define units/boundaries per Sisto) | Plaintiffs/Harbor Houses: SAR improperly allocates voting, altered allocated interests without unanimous consent, and fails to describe unit boundaries as required | Defendants: SAR implements allocation consistent with America I, allocates votes to individual unit owners, used existing formula so no change in percentage shares, sub-condominiums and their declarations incorporate unit boundaries | SAR is valid: voting allocation complies with America I; unanimous consent not required because allocated interests unchanged in percentage terms; SAR adequately incorporates unit boundaries; Sisto not controlling to invalidate SAR |
| Whether individual GIS board members are personally liable for adopting an illegal declaration | Plaintiffs: board members knowingly recorded illegal declaration disenfranchising minority owners | Defendants: adoption was by association action, SAR lawful, no individual acts creating personal liability | No individual liability on the record; summary judgment for board members appropriate |
| Whether plaintiffs should be allowed to amend complaint to add mutual-mistake rescission of SAR | Plaintiffs: amendment not prejudicial and should be allowed under Rule 15 | Defendants: amendment unduly late and futile; indispensable parties absent | Denied as futile: no mutual mistake shown (parties intended same structure) and amendment would omit indispensable interested unit owners |
Key Cases Cited
- America Condominium Association, Inc. v. IDC, Inc., 844 A.2d 117 (R.I. 2004) (invalidated voting scheme that excluded individual unit owners)
- America Condominium Association, Inc. v. IDC, Inc., 870 A.2d 434 (R.I. 2005) (clarified that undeveloped parcels were common elements owned by individual unit owners)
- Sisto v. America Condominium Association, Inc., 68 A.3d 603 (R.I. 2013) (interpreted Condominium Act requirement of unanimous consent for expansion onto common elements and discussed unit-definition in master declaration)
- Torrado Architects v. Rhode Island Department of Human Services, 102 A.3d 655 (R.I. 2014) (explained transactional approach to identity of issues for res judicata)