59 N.E.3d 1051
Ind. Ct. App.2016Background
- Schaefer Lake Addition was developed in phases; Marvin and Linda Hamilton bought Lot 89 in Section 2 circa 1973–74, subject to recorded Covenants.
- Covenants (originally 25-year term with renewal provisions) allowed amendment by instrument signed by a majority of lot owners and recorded.
- In 1977 the Schaefers recorded a Declaration and the Association amended its Articles providing membership was tied to a $15 initial fee; in 1996 a majority of Section 2 owners approved an amendment making all Section 2 lot owners members of Schaefer Lake Lot Owners Association and subject to its rules.
- In 2002 the Association adopted Rules authorizing the board to propose annual and special assessments, to be approved by a majority of a quorum of members; notice and proxy procedures were used.
- The Association sued the Hamiltons in small claims court (2013) for unpaid annual and special assessments; after a bench trial the court awarded judgment for assessments, attorney fees, costs, and interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hamiltons are members of the Association | Association: 1996 Covenant amendment made all Section 2 lot owners members | Hamiltons: original Covenants didn’t require membership; they never signed the 1996 amendment or voluntarily joined | Court: Hamiltons are members because they bought subject to amendable Covenants and majority amendment validly bound them |
| Whether Hamiltons owe assessments | Association: Rules and board/procedure validly established annual/special assessments approved by members | Hamiltons: assessments were not validly approved; they didn’t pay the $15 initial fee so aren’t members | Court: Assessments were validly approved under Rules; fee requirement was superseded for mandatory membership |
| Whether failure to pay $15 initial membership fee precludes membership | Association: 1996 amendment made membership mandatory regardless of fee | Hamiltons: nonpayment of fee means no membership | Held: Fee provision applied before mandatory-membership amendment; nonpayment does not defeat membership |
| Whether statute of limitations bars claims for pre-2008 assessments | Association: written-covenant claim within 10-year written-contract limitations period | Hamiltons: SOL bars amounts assessed before 2008 | Court: Issue waived by not raising at trial, and merits: action filed 2013 for assessments back to 2004 is within ten-year written-contract SOL; claims not time-barred |
Key Cases Cited
- Grandview Lot Owner Ass’n, Inc. v. Harmon, 754 N.E.2d 554 (Ind. Ct. App. 2001) (restrictive covenants function to control land use and preserve value)
- Harness v. Parkar, 965 N.E.2d 756 (Ind. Ct. App. 2012) (restrictive covenants are construed strictly and like contracts)
- Trinity Homes, LLC v. Fang, 848 N.E.2d 1065 (Ind. 2006) (appellate review of bench trial factual findings follows clearly erroneous standard)
- LTL Truck Serv., LLC v. Safeguard, Inc., 817 N.E.2d 664 (Ind. Ct. App. 2004) (appellate review considers evidence in light most favorable to judgment)
- Van Winkle v. Nash, 761 N.E.2d 856 (Ind. Ct. App. 2002) (issues not raised at trial are waived)