Lost Lake Resort Condo Assn, V. Lost Lake Resort
54365-6
Wash. Ct. App.Jul 7, 2021Background
- Lost Lake Resort Condominium Association (Association) sued Lost Lake Development, LLC, Lost Lake Resort, LLC, and their owners (Block and McCausland) for breach of a contract concerning improvements and forgiveness of assessments; suit filed March 6, 2019.
- The condominium declaration’s Section 10.12 governs Association authority to institute legal proceedings and requires an 80% owner vote (10.12.3) before incurring legal obligations over $5,000.
- Section 10.12.2(e) creates a narrow exception allowing the Association to file a complaint, answer, or other pleading for the limited purpose of satisfying a statute-of‑limitations deadline (and only if total costs do not exceed $5,000).
- After filing, the Association engaged in discovery and motions practice; defendants moved for summary judgment, arguing the board never complied with the 10.12.3 procedures (no litigation summary circulated, no owner approval).
- The trial court granted summary judgment for defendants and dismissed the case with prejudice on authority grounds.
- The Court of Appeals held the Association lacked authority under the declaration to maintain the expanded litigation (so summary judgment was proper) but vacated the dismissal with prejudice and remanded for dismissal without prejudice; it also awarded defendants appellate fees under the condominium statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the declaration authorized the Association to file and continue litigation to preserve the statute of limitations without owner approval | The declaration’s §10.12.2(e) permits filing to toll the statute of limitations and exempts the Association from §10.12.3 procedures, so owner approval was unnecessary | §10.12.2(e) is a narrow exception limited to filing a pleading solely to preserve the statute of limitations; further litigation activity or costs > $5,000 requires compliance with §10.12.3 and owner approval | Held for defendants: §10.12.2(e) is limited to the specific filing acts; Association exceeded that limited exception and needed owner approval, so it lacked authority to continue the suit |
| Whether the Association may, consistent with the Condominium Act, waive declaration limits on litigation authority (unenforceability of the declaration provision) | The condominium statute creates enforceable rights and a public policy preventing waivers that block enforcement of the Act or declaration | Defendants: argument not considered on appeal because it was raised for the first time there | Not considered on appeal (issue forfeited for failure to raise below) |
| Whether dismissal should have been with prejudice | Dismissal with prejudice prevents refiling even if the Association later obtains owner approval; court should not preclude future suit because merits were not adjudicated | Dismissal with prejudice appropriate because Association lacked authority to pursue the case | Held for plaintiffs on this point: dismissal with prejudice was error; remanded for dismissal without prejudice |
Key Cases Cited
- Mohr v. Grantham, 172 Wn.2d 844 (summary judgment reviewed de novo)
- Lake v. Woodcreek Homeowners Ass'n, 169 Wn.2d 516 (declaration interpretation is mixed question; intent discerned from face of declaration)
- Pritchett v. Picnic Point Homeowners Ass'n, 2 Wn. App. 2d 872 (construe declaration plain language first)
- Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 853 (distinguishing dismissals with and without prejudice)
- Viking Bank v. Firgrove Commons 3, LLC, 183 Wn. App. 706 (interpret contract/declaration provisions in context as a whole)