COLORADO COURT OF APPEALS                                         2016COA123


Court of Appeals No. 15CA0757
Eagle County District Court No. 09CV320
Honorable Frederick W. Gannett, Judge


Arrabelle at Vail Square Residential Condominium Association, Inc.,

Plaintiff-Appellee and Cross-Appellant,

v.

Arrabelle at Vail Square LLC,

Defendant-Appellant and Cross-Appellee.


                            JUDGMENT AFFIRMED

                                 Division III
                         Opinion by JUDGE GRAHAM
                       Booras and Márquez*, JJ., concur

                         Announced August 25, 2016


Lewis Roca Rothgerber Christie LLP, Scott M. Browning, Alex C. Myers, Denver,
Colorado; Zonies Law LLC, Sean Connelly, Denver, Colorado, for Plaintiff-
Appellee and Cross-Appellant

Gibson, Dunn & Crutcher LLP, Gregory J. Kerwin, Robert C. Blume, M. Scott
Campbell, Denver, Colorado, for Defendant-Appellant and Cross-Appellee


*Sitting by assignment of the Chief Justice under provisions of Colo. Const. art.
VI, § 5(3), and § 24-51-1105, C.R.S. 2015.
¶1    In this case interpreting provisions of the Colorado Common

 Interest Ownership Act (CCIOA), sections 38-33.3-101 to -402,

 C.R.S. 2015, we are asked to determine, among other related

 issues, whether a mixed-use community consisting of a hotel, retail

 shops, restaurants, and sixty-six condominiums is a “small planned

 community” under section 38-33.3-116, C.R.S. 2015, of CCIOA.

 We conclude it is not and, therefore, affirm the judgment of the trial

 court.

                             I. Background

¶2    The Arrabelle at Vail Square is a luxury development at the

 base of Vail Mountain in Vail, Colorado. Built and managed by Vail

 Resorts Development Company and Arrabelle at Vail Square LLC

 (Vail Resorts), the development (Arrabelle) includes multi-million

 dollar residential condominiums, a boutique hotel, restaurants,

 retail shops, an ice-skating rink, a spa, parking, and other

 amenities.

¶3    At the time of development, Vail Resorts recorded a plat

 establishing seven separate real estate parcels collectively titled “Lot

 1” and “Airspace Lots A-F” at the Arrabelle. Vail Resorts then


                                    1
 entered into a Reciprocal Easements and Covenants Agreement

 (RECA) governing those parcels and creating two lots — the

 Airspace Lot (which would be developed into condominiums) and

 the Project Lot (the remainder of the property). The RECA

 establishes benefits, burdens, and allocation of costs between both

 lots, and it regulates the use and enjoyment of both lots.

¶4    In pertinent part, the RECA originally contained the following

 two provisions:

           18. SMALL PLANNED COMMUNITY
           EXCEPTION. The Parties hereby acknowledge
           and agree that this Agreement constitutes a
           “declaration” and creates a “common interest
           community” under CCIOA. Specifically, this
           Agreement creates a “planned community”
           under CCIOA, and not a “condominium,” as
           those terms are defined by CCIOA. The
           planned community created by this Agreement
           contains only two lots, the Project Lot and the
           Airspace Lot, and is therefor exempt from
           CCIOA’s provisions pursuant to the exemption
           contained in Section 38-33.3-116(2) of CCIOA
           for planned communities containing no more
           than 20 lots. The Parties acknowledge and
           agree that the Project Lot and the Airspace Lot
           will not be bound by or subject to the
           provisions of CCIOA, except as expressly
           required under CCIOA, as in effect at the date
           of this Agreement. In addition, the Parties
           acknowledge and agree that neither the Project
           Owner nor the Airspace Lot Owner shall be
                                   2
          deemed a “master association” within the
          meaning of Section 38-33.3-220 of CCIOA.
          Without limitation on the generality of the
          foregoing, the Parties acknowledge and agree
          that the Airspace Lot constitutes an estate
          above the surface within the meaning of
          Section 38-32-101, et. seq., C.R.S., and not a
          condominium within the meaning of CCIOA;
          the Airspace Lot Owner Easements constitute
          the sole property interest in the Project
          Improvements[1] that is held by the Airspace
          Lot Owner as appurtenances to the Airspace
          Lot; and there are not any “common elements”
          or other portions of the Project Improvements
          in which the Airspace Lot Owner holds any
          undivided or other ownership interest.

          19. CONDOMINIUMIZATION OF AIRSPACE
          LOT. Notwithstanding but without limiting the
          provisions of Section 18 above, the Parties
          acknowledge and agree that the Airspace Lot
          Owner may, at its election, subject the
          Airspace Lot to a condominium regime under
          CCIOA. Regardless of any such
          condominiumization, the Airspace Lot will
          continue to be a single lot for all purposes
          under this Agreement. Any owners’
          association formed pursuant to CCIOA (the
          “Association”) will be deemed the “Airspace Lot
          Owner,” all owners of such condominium units
          will act and be treated collectively through the
          Association under this Agreement and each
          owner of a condominium unit, by taking title to


1The RECA defines Project Improvements as “a hotel and related
amenities, restaurants, a plaza area with an ice skating rink, retail
space, a parking garage and skier services . . . located on the
Project Lot.”
                                  3
           a condominium unit, irrevocably and
           unconditionally appoints the Association as its
           duly authorized representative and attorney-
           in-fact for all purposes of this Agreement.
           Notwithstanding that the Association shall be
           deemed the “Airspace Lot Owner,” the Airspace
           Lot Owner Easements will be deemed granted
           to the Association for the benefit of its
           members and the use restrictions on the
           Airspace Lot will apply to and may be enforced
           against all or any portions of the Airspace Lot
           and the owners thereof, as the Project Owner
           may elect from time to time. In any event,
           each owner of a portion of the Airspace Lot,
           whether condominiumized or not, is subject to
           all provisions of this Agreement.

¶5    The RECA established that the Airspace Lot Owner would be

 responsible for a flat amenity access fee set by the Project Owner

 and 59.7% of the operating and capital improvement costs of the

 Arrabelle. As the owner of both the Airspace Lot and the Project

 Lot, Vail Resorts signed the RECA on behalf of both owners.

¶6    Immediately after recording the RECA, Vail Resorts recorded a

 condominium plat creating sixty-six condominiums in the Airspace

 Lot and a condominium declaration creating the Arrabelle at Vail

 Square Residential Condominium Association, Inc. (Association).

 The condominiums ultimately sold with base prices ranging from

 $1,195,000 to $6,695,000.

                                   4
¶7    Problems arose between Vail Resorts and the Association

 within the first year of operation. While the RECA required the

 Association to pay a $1,975,853 expense payment in 2008, the

 Association objected. And because the 2008 Arrabelle operations

 ran substantially over budget, the Association was facing yet a

 larger expense payment in 2009. On February 17, 2009, the

 Association notified Vail Resorts it was terminating the RECA.

¶8    On June 1, 2009, the Association filed this action seeking a

 declaratory judgment allowing it to terminate the RECA or

 alternatively ruling that the RECA was in violation of CCIOA,

 requiring reformation. The Association made additional claims for

 statutory breach of good faith, breach of fiduciary duties, and

 breach of the common law duty of good faith and fair dealing. Vail

 Resorts counterclaimed for breach of contract and unjust

 enrichment.

¶9    The case proceeded in three phases. First, the trial court

 granted the Association’s motion for partial summary judgment,

 ruling that the Arrabelle is not a CCIOA small planned community

 under section 38-33.3-116(2) because it was subject to development


                                   5
  rights. See § 38-33.3-116(2) (“If a . . . planned community created

  in this state on or after July 1, 1998, contains . . . no more than

  twenty units and is not subject to any development rights, it is

  subject only to sections 38-33.3-105 to 38-33.3-107[, C.R.S. 2015,]

  . . . .”).

¶ 10     Second, the court conducted a trial addressing the method of

  reforming the RECA to comply with CCIOA (Phase I Trial). Under

  sections 38-33.3-112 and -203, C.R.S. 2015, the court struck the

  amenity access fee from the RECA and reformed the agreement to

  include, among other things, mandatory alternative dispute

  resolution. See § 38-33.3-124, C.R.S. 2015 (dispute resolution

  under CCIOA). The court also concluded that the RECA included

  an incorrect cost allocation ratio (allocating 59.7% to the residences

  in the Airspace Lot and 40.3% to the Project Lot) and readjusted the

  burden to 49.1% to the Airspace Lot residences.

¶ 11     The court also ordered the parties to draft and ratify a master

  association declaration. § 38-33.3-220. Because the parties were

  unable to agree on a declaration after approximately one year, the

  court referred the matter to a special master who drafted a third


                                     6
  amendment to the RECA incorporating the court’s changes along

  with articles of incorporation and bylaws for a new master

  association. The court adopted the special master’s recommended

  instruments in July 2014.

¶ 12   Third, the trial court held a trial on the remaining claims of

  breach of good faith, breach of contract, and unjust enrichment

  (Phase II Trial). Ultimately, the court denied all outstanding claims

  and awarded the Association, as the prevailing party, $2,500,000 in

  stipulated attorney fees.2




  2 The trial court adopted the Association’s proposed findings for the
  Phase I Trial order and Vail Resorts’ proposed findings for the Phase
  II Trial order. This has caused conflict among the findings of the
  court and resulted in each party relying almost exclusively on its
  own findings on appeal. However, because the court noted on the
  first day of the Phase II Trial that “[t]o the extent I made a ruling,
  that’s binding. And while you might argue in your proposed
  findings that I made erroneous conclusions in my first order . . . [t]o
  the extent I made rulings . . . they’re done,” we look to the Phase I
  order as the definitive law of the case. Indeed, the Phase II order
  states:

            [T]his Court reaffirms its prior determination
            that [Vail Resorts’] development scheme has
            systemic flaws, which were further analyzed in
            the Phase I order. . . . Here in the Phase II
            Order, the Court denie[s] all the claims and
            counter-claims of both parties which effectively
                                     7
¶ 13   Vail Resorts appeals the following trial court rulings: (1) the

  conclusion that the Arrabelle is not a “small planned community”

  under CCIOA section 38-33.3-116(2) because Vail Resorts reserved

  development rights under the RECA; (2) the reformed cost allocation

  based on the court’s conclusion that the RECA violated CCIOA

  section 38-33.3-207(2), C.R.S. 2015, because the original allocation

  discriminated “in favor of units owned by the declarant”; and (3) the

  adopted reformed RECA and master association documents

  because those documents contain terms not required by CCIOA.

  The Association conditionally cross-appeals the court’s conclusion

  that the Association did not validly terminate the RECA by

  e-mailing notice of termination to Vail Resorts under CCIOA section

  38-33.3-305, C.R.S. 2015.

                          II. Standard of Review

¶ 14   Statutory interpretation is a question of law that we review de

  novo. Triple Crown at Observatory Vill. Ass’n v. Vill. Homes of Colo.,

  Inc., 2013 COA 150M, ¶ 10. Because a court’s primary duty is to



            leave[s] only that relief granted in the Phase I
            Order as the law of the entire case.

                                    8
  give full effect to the General Assembly’s intent, interpretation

  begins by examining the statute’s plain language within the context

  of the statute as a whole. Id. “Words and phrases should be given

  effect according to their plain and ordinary meaning . . . .” Farmers

  Grp., Inc. v. Williams, 805 P.2d 419, 422 (Colo. 1991). The court

  “must not strain to give language other than its plain meaning,

  unless the result is absurd.” Colo. Dep’t of Soc. Servs. v. Bd. of Cty.

  Comm’rs, 697 P.2d 1, 18 (Colo. 1985), superseded by statute on

  other grounds, Ch. 58, 1985 Colo. Sess. Laws 289-90.

¶ 15   CCIOA is patterned after the Uniform Common Interest

  Ownership Act (UCIOA), and “we accept the intent of the drafters of

  a uniform act as the General Assembly’s intent when it adopts a

  uniform act.” Yacht Club II Homeowners Ass’n v. A.C. Excavating,

  94 P.3d 1177, 1180 (Colo. App. 2003), aff’d, 114 P.3d 862 (Colo.

  2005).

           III. CCIOA’s Small Planned Community Exception

¶ 16   CCIOA provides in pertinent part that “[i]f a . . . planned

  community created in this state on or after July 1, 1998, contains

  . . . no more than twenty units and is not subject to any


                                     9
development rights, it is subject only to sections 38-33.3-105 to

38-33.3-107 . . . .” § 38-33.3-116(2).

           “Development rights” means any right or
           combination of rights reserved by a declarant
           in the declaration to:

           (a) Add real estate to a common interest
           community;

           (b) Create units, common elements, or limited
           common elements within a common interest
           community;

           (c) Subdivide units or convert units into
           common elements; or

           (d) Withdraw real estate from a common
           interest community.

§ 38-33.3-103(14), C.R.S. 2015. “‘Common interest community’

means real estate described in a declaration with respect to which a

person, by virtue of such person’s ownership of a unit, is obligated

to pay for real estate taxes, insurance premiums, maintenance, or

improvement of other real estate described in a declaration.” § 38-

33.3-103(8). A “‘[d]eclarant’ means any person or group of persons

acting in concert who: . . . [r]eserves or succeeds to any special

declarant right.” § 38-33.3-103(12)(b); see § 38-33.3-103(21)

(“‘Person’ means . . . a corporation . . . .”). And “‘[s]pecial declarant

                                    10
  rights’ means rights reserved for the benefit of a declarant to . . .

  exercise any development right.” § 38-33.3-103(29).

¶ 17   The provisions of CCIOA “may not be varied by agreement, and

  rights conferred by this article may not be waived. A declarant may

  not act under a power of attorney or use any other device to evade

  the limitations or prohibitions of this article or the declaration.”

  § 38-33.3-104, C.R.S. 2015.

                          A. Development Rights

¶ 18   In granting the Association’s motion for partial summary

  judgment, the trial court concluded that section 19 of the RECA

  reserved the right to condominiumize the Airspace Lot and,

  therefore, reserved a development right in Vail Resorts as defined by

  section 38-33.3-103(14). By using plain language indicating the

  existence of a future right — “the Airspace Lot Owner may, at its

  election, subject the Airspace Lot to a condominium regime” — Vail

  Resorts reserved the right to create within the Airspace Lot a

  common interest community in which physical portions thereof

  would be designated for separate ownership. § 38-33.3-103(8)

  (defining common interest community); § 38-33.3-103(9) (defining


                                     11
  condominium). These separately owned physical portions of the

  Airspace Lot would be units. § 38-33.3-103(30) (“‘Unit’ means a

  physical portion of the common interest community which is

  designed for separate ownership . . . .”). Therefore, the plain

  language of the RECA allowed Vail Resort to “[c]reate units . . .

  within a common interest community.” § 38-33.3-103(14).

  Consequently, the court concluded the RECA subjected the

  Airspace Lot to “development rights” precluding the Arrabelle from

  becoming a small planned community.

¶ 19   Vail Resorts argues that the Arrabelle is a small planned

  community because (1) UCIOA section 4-103(b) (Unif. Law Comm’n

  1982) establishes that CCIOA does not consider the ability to create

  nested common interest communities as development rights; (2) the

  UCIOA requires that a development right alter the legal structure of

  an existing common interest community and the

  condominiumization of the Airspace Lot did not alter the Arrabelle’s

  legal structure; and (3) the RECA did not reserve any development

  rights in the “declarant” but rather in the “Airspace Lot Owner,”




                                    12
  who coincidentally happened to be the declarant in these

  circumstances.

¶ 20   Vail Resorts relies upon UCIOA section 4-103(b) (a section that

  was not adopted in CCIOA) to support an argument that although a

  declarant may reserve a power to place one common interest

  community inside another, such a power is not a development

  right. That section provides:

            If a common interest community composed of
            not more than 12 units is not subject to any
            development rights and no power is reserved to
            a declarant to make the common interest
            community part of a larger common interest
            community, group of common interest
            communities, or other real estate, a public
            offering statement may but need not include
            the information otherwise required by
            paragraphs (9), (10), (15), (16), (17), (18), and
            (19) of subsection (a) and the narrative
            descriptions of documents required by
            subsection (a)(4).

  UCIOA § 4-103(b) (Unif. Law Comm’n 1982).

¶ 21   We reject this argument for three reasons. First, UCIOA

  section 4-103(b) deals not with development rights but with

  disclosure requirements and exempts a declarant from making

  certain disclosures where the common interest community is small


                                   13
  and the declarant has no power to attach it to another community

  that would result in a common interest community of more than

  twelve units. It does not alter CCIOA’s definition of development

  rights.

¶ 22   Second, it is apparent here that Vail Resorts did in fact have

  the power to expand the size of the Arrabelle. It created a common

  interest community in the Airspace Lot and, in doing so, quite

  obviously exercised a power reserved in the RECA. That it now

  chooses to describe that power as something other than a

  development right is a distinction without a difference.

¶ 23   Third, the creation of sixty-six condominiums would not allow

  a declarant to qualify for an exemption under the small planned

  community provision of UCIOA section 4-103(b) in any case. We

  can find no provision in either CCIOA or UCIOA for the creation of

  an “air lot” above an existing real estate footprint that can contain a

  large number of condominiums amalgamated as a single “unit” that

  would qualify as a small planned community. In our view this

  violates the letter and the spirit of CCIOA’s definition of




                                     14
  development rights and, consequently, we discern no error in the

  trial court’s conclusion to that effect.

¶ 24   The reservation of the right to establish a second common

  interest community within the boundaries of an existing common

  interest community is far more akin to the ability to create units

  under section 38-33.3-103(14)(b) than the unadopted exclusion

  contained in UCIOA section 4-103(b).

¶ 25   Vail Resorts also contends that under CCIOA a development

  right must alter the legal structure of the existing common interest

  community. Because RECA section 19 only allows for the creation

  of a new common interest community within the existing legal

  structure of the Arrabelle, Vail Resorts argues section 19 did not

  reserve a development right. We disagree.

¶ 26   UCIOA section 2-105 comment 1 (Unif. Law Comm’n 1982)

  states in pertinent part:

             This Act makes a functional distinction
             between the declaration and the public offering
             statement. It only requires the declaration to
             contain those matters which affect the legal
             structure or title of the common interest
             community. This includes the reserved powers
             of the declarant to exercise development rights
             within the common interest community. A
                                     15
               narrative description of those rights, however,
               and the possible consequences flowing from
               their exercise, are required to be disclosed only
               in the public offering statement and not in the
               declaration.

  (Emphasis added.)

¶ 27   Relying on this comment, Vail Resorts argues RECA section 19

  does not allow the new condominium community in the Airspace

  Lot to affect the legal structure of the Arrabelle. But Vail Resorts

  completely glosses over the next two words — “or title” — in the

  comment. When Vail Resorts subjected the Airspace Lot to

  condominiumization, it sold units to individuals who then gained

  title to that property. Even ignoring the individual condominiums,

  the common interest community within a common interest

  community development still resulted in the Association becoming

  the owner of the Airspace Lot, thereby affecting the title of the

  Arrabelle.

¶ 28   Moreover, UCIOA section 2-105 addresses those matters that

  must be contained in a declaration; it is not a clear definition of

  development rights. Instead, UCIOA section 1-103 comment 13

  (Unif. Law Comm’n 1982) expressly defines development rights:


                                      16
“Development rights,” includes a panoply of
sophisticated development techniques that
have evolved over time throughout the United
States and which have been expressly
recognized and regulated in the case of
condominiums, in an increasing number of
jurisdictions, beginning with Virginia in 1974.

The concept of “development rights” lies at the
heart of one of the principal goals of the Act,
which is to maximize the flexibility available to
a developer seeking to adjust the size and mix
of a project to the demands of the marketplace,
both before and after creation. The principal
constraint on that flexibility is the obligation of
disclosure, and its impact on marketing. Thus
“development rights” include the rights to:

(a) increase the size or density of a project,
either by adding real property to it, or by
creating new units, common elements or
limited common elements on either the original
land or within the original buildings, or on any
other land or buildings subsequently added;

(b) change the mix of units, common elements
and limited common elements, either by
subdividing units, or by converting units into
common elements or limited common
elements; and

(c) reduce the size of a project by withdrawing
real property — whether land, entire buildings,
or particular units — from it.

As a matter of simple logic, there are few other
things that could be done to a real property
regime which are not include [sic] within the
concept of development rights. This great
                        17
flexibility, particularly when coupled with the
broad definitions of “unit” and “real estate”,
the power to create leasehold projects, and the
right to subordinate unit mortgages to blanket
mortgage on either the units or common
elements, is an important element in the Act.

....

The right “to create units, common elements,
or limited common elements” has frequently
been useful in the case of commercial or mixed
use common interest communities, where the
declarant needs to retain a high degree of
flexibility to meet the space requirements of
prospective purchasers who may not approach
him until the common interest community has
already been created. For example, an entire
floor of a high-rise building may be intended
for commercial buyers, but the declarant may
not know in advance whether one purchaser
will want to buy the whole floor as a single
unit or whether several purchasers will want
the floor divided into service [sic] units,
separated by common element walls and
served by a limited common element corridor.
This development right is sometimes useful
even in purely residential common interest
communities, especially those designed to
appeal to affluent buyers. Similarly, the
development rights “to subdivide units or
convert units into common elements” is most
often of value in commercial common interest
communities, but may be useful in certain
kinds of residential common interest
communities as well.



                      18
¶ 29   Section 19 of the RECA allows Vail Resorts to “increase the . . .

  density of [the] project . . . by creating new units . . . on . . . the

  original land.” UCIOA § 1-103 cmt. 13 (Unif. Law Comm’n 1982).

  Thus, the condominiumization of the Airspace Lot was a

  development right.

¶ 30   Vail Resorts next argues the RECA reserved the

  condominiumization of the Airspace Lot to the “Airspace Lot

  Owner,” not the “declarant,” and, therefore, it is not a development

  right. The creativeness of this argument does not further Vail

  Resorts’ position. Ultimately, when the RECA was drafted, Vail

  Resorts was both the declarant and the Airspace Lot Owner.

  Section 38-33.3-103(31) states in pertinent part that a “‘[u]nit

  owner’ means the declarant or other person who owns a unit . . . .

  In a . . . planned community, the declarant is the owner of any unit

  created by the declaration until that unit is conveyed to another

  person.”

¶ 31   The RECA was created by Vail Resorts, which owned both the

  Airspace Lot and the Project Lot, and was signed on behalf of “both

  owners” by the same individual. To split hairs so finely as Vail


                                       19
  Resorts would have us do would lead to an absurd result where a

  declarant, simply by titling itself as “Unit Owner,” could circumvent

  the clear intent of section 38-33.3-116(2) to exclude planned

  communities with development rights from the small planned

  community exception to CCIOA. See UCIOA § 1-103 cmt. 24 (Unif.

  Law Comm’n 1982) (“The definition makes it clear that a declarant,

  so long as he owns units in a common interest community, is the

  unit owner of any unit created by the declarations, and is therefore

  subject to all of the obligations imposed on other unit owners,

  including the obligation to pay common expense assessments.”).

¶ 32   RECA section 19 provides “that the Airspace Lot Owner may,

  at its election, subject the Airspace Lot to a condominium regime

  under CCIOA.” When executed, the Airspace Lot Owner was the

  declarant creating the declaration reserving the right to

  condominiumize. Therefore, the declarant was reserving the right

  to create units in the common interest community and that

  community was subject to development rights. § 38-33.3-116(2);

  see § 38-33.3-103(14)(b), (29). Accordingly, the Arrabelle is not a

  small planned community.


                                    20
                           B. Number of Units

¶ 33   The Association alternatively argues on appeal that we may

  affirm the decision of the trial court because the Arrabelle contains

  more than twenty units. § 38-33.3-116(2) (a small planned

  community contains no more than twenty units); see Taylor v.

  Taylor, 2016 COA 100, ¶ 31 (“An appellate court may . . . affirm on

  any ground supported by the record.”). The Association and Vail

  Resorts disagree about how to quantify the number of units in the

  Arrabelle.

¶ 34   Vail Resorts argues that RECA section 18 establishes only two

  lots for purposes of section 38-33.3-116(2): “The planned

  community created by this Agreement contains only two lots, the

  Project Lot and the Airspace Lot, and is therefore exempt from

  CCIOA’s provisions pursuant to the exemption contained in section

  38-33.3-116(2) of CCIOA for planned communities containing no

  more than 20 lots.” Therefore, Vail Resorts argues that when it

  created the condominium units under the separately filed

  condominium declaration, it did not alter the two unit structure of

  the Arrabelle.


                                    21
¶ 35   On the other hand, the Association argues that CCIOA does

  not provide for the separate consideration of units within a single

  planned community based on separate declarations filed by the

  declarant. See § 38-33.3-103(13) (“‘Declaration’ means any

  recorded instruments however denominated, that create a common

  interest community, including any amendments to those

  instruments and also including, but not limited to, plats and

  maps.”); Lynn S. Jordan et al., The Colorado Common Interest

  Ownership Act, 21 Colo. Law. 645, 650 (Apr. 1992) (“Under CCIOA,

  a declaration includes not only the recorded document entitled

  ‘declaration,’ setting forth covenants, conditions and restrictions,

  but also all recorded maps, plats and plans or any combination

  thereof.”). Instead, the Association suggests that all separately

  owned physical portions within a planned community should be

  counted together for purposes of the small planned community

  exception. See § 38-33.3-103(30) (defining unit).

¶ 36   We agree with the Association. Reading CCIOA as a whole it is

  apparent that the General Assembly intended a “clear,

  comprehensive, and uniform framework for the creation and


                                    22
  operation of common interest communities.” § 38-33.3-102(1)(a),

  C.R.S. 2015 (CCIOA legislative declaration). The small planned

  community exception, section 38-33.3-116, is meant to remove

  communities with fewer than twenty units and no development

  rights from this “clear, comprehensive, and uniform framework.” It

  is the exception, not the rule.

¶ 37   The General Assembly intended for most common interest

  communities to be bound by CCIOA and for developers to have

  “flexible development rights with specific obligations within a

  uniform structure of development of a common interest

  community.” § 38-33.3-102(1)(c) (emphasis added). Allowing Vail

  Resorts to use multiple levels of declarations to avoid those specific

  obligations through a hyper-technical interpretation of CCIOA

  violates the purpose and the spirit of the statute. Furthermore, a

  developer “may not . . . use any . . . device to evade the limitations

  or prohibitions of this article” and the “rights conferred by this

  article may not be waived.” § 38-33.3-104. Were we to accept Vail

  Resorts’ interpretation of CCIOA, we would be supporting a legal




                                    23
  fiction intended to evade the limitations and prohibitions of CCIOA.3

  The General Assembly has expressly disavowed this approach.

¶ 38   The Arrabelle contains a hotel, retail shops, restaurants,

  parking, a spa, an ice-skating rink, and sixty-six condominiums.

  This, by common definition, is not a “small planned community.”

  And by statutory definition, we conclude the Arrabelle contains

  sixty-seven units (the Project Lot owned by Vail Resorts and sixty-

  six condominiums whose physical portion of the common interest

  community is designed for separate ownership). We perceive no

  language in CCIOA to support Vail Resorts’ argument that the fact

  that these units were created by two declarations should preclude

  their consideration for the total number of units within a single

  planned community.

¶ 39   Nor are we concerned that this conclusion requires reversing

  the trial court as suggested by Vail Resorts. After the Phase I Trial,



  3 Counsel responsible for drafting the RECA gave a presentation at
  the American Bar Association’s Joint Fall Session on September 28,
  2007, where she acknowledged that the RECA was intended to
  prevent residents from having “any say, period.” When testifying at
  the Phase I Trial, counsel also acknowledged that the RECA used a
  square footage allocation model “to keep the residential owners out
  of the process.”
                                    24
the court was forced to appoint a special master to complete the

reformation of the RECA and creation of a master association. The

instruments adopted by the court include statements that “[t]here is

hereby created a planned community . . . consisting of the Project

Lot and the Airspace Lot” and “[e]ach Lot is a ‘unit’ as defined by

the Act.” There is nothing in CCIOA to suggest that the current

structure of the Arrabelle as a Project Lot and Airspace Lot with

sixty-six separate condominium units within the Airspace Lot is

inappropriate. See § 38-33.3-103(22) (“A condominium or

cooperative may be part of a planned community.”). Rather, the

error would be in allowing that structure to skirt the requirements

of CCIOA by hiding behind a fictional two-unit scheme. Developers

are free to exercise their “flexible development rights” so long as

they respect the “specific obligations” of CCIOA.

§ 38-33.3-102(1)(c). Hence, a developer may create a common

interest community that has multiple declarations creating planned

communities and condominium communities,4 but a court may



4For example, Highlands Ranch, Colorado, a town of 96,000
people, is a common interest community covered by CCIOA.
Highlands Ranch Metro District, https://perma.cc/VU94-8N8Y;
                                  25
  consider all the units within that common interest community in

  determining whether the small planned community exception to

  CCIOA applies. See § 38-33.3-103(8) (common interest

  community); § 38-33.3-103(9) (condominium); § 38-33.3-103(22)

  (planned community); § 38-33.3-103(30) (unit); § 38-33.3-116

  (small planned community exception).

¶ 40   In short, because the Arrabelle contains a total of sixty-seven

  units, it is not a small planned community containing fewer than

  twenty units under section 38-33.3-116(2).

                      IV. Reformation of the RECA

¶ 41   After determining that the Arrabelle was not a small planned

  community, the court conducted the Phase I Trial to determine how

  to reform the RECA to comply with CCIOA.

¶ 42   Part of the trial focused on whether the cost allocation

  provision of the RECA violated CCIOA section 38-33.3-207(2), which

  requires that cost “allocations may not discriminate in favor of units

  owned by the declarant or an affiliate of the declarant.” Ultimately,

  the court concluded that while the square footage mechanism to


  Highlands Ranch Community Association, Governing Documents,
  https://perma.cc/4HAG-RQUT.
                                   26
  determine cost allocation listed in the RECA was appropriate, the

  original cost allocation of 59.7% to the Association was based upon

  “square footage calculations pulled from various maps and tables

  prepared long before the Arrabelle was constructed,” which

  discriminated in favor of Vail Resorts. Therefore, the court accepted

  the calculations of the Association’s expert who used as-built

  drawings to calculate square footage, resulting in a 49.1%

  allocation to the Association.

¶ 43   The remainder of the Phase I Trial focused on how to reform

  the balance of the RECA. The court ordered the parties to create a

  master association, § 38-33.3-220, strike the amenity access fee in

  the cost allocation provision, § 38-33.3-207, adjust utility costs,

  § 38-33.3-315, C.R.S. 2015, and consent to binding arbitration,

  § 38-33.3-124.

                            A. Cost Allocation

¶ 44   Section 6(b) of the RECA states:

            Each calendar year, the Airspace Lot Owner
            will pay to the Project Owner a portion,
            calculated as provided for below (the “Expense
            Payment”), of the operating, maintenance,
            utility, employee and other expenses related to
            the ongoing ownership, operation and
                                    27
          maintenance of the Project Improvements,
          including, without limitation, the Amenities,
          and related off-site improvements and facilities
          to the extent the responsibility of the Project
          Owner (the “Operating Costs”). The Operating
          Costs in no event will include any costs solely
          attributable to an income-generating portion of
          the Project Improvements for which the
          Airspace Lot Owner has access to or use of by
          virtue of being a member of the public, and not
          due to the Airspace Lot Owner’s rights under
          this Agreement, such as, by way of example
          only, any restaurant or retail shop within the
          Project Improvements, all as determined by the
          Project Owner in its ordinary business
          judgment. The Parties acknowledge and agree
          that the Expense Payment is also intended to
          compensate the Project Owner for, among
          other things, the cost of all utility services
          provided to the Airspace Lot as part of the
          utility service provided to the Project
          Improvements, but not separately metered,
          and the cost of valet service. Each year’s
          Expense Payment will be comprised of two
          components: (a) a flat fee intended to cover the
          Airspace Lot Owner’s share of all Operating
          Costs related to the Amenities (the “Amenity
          Access Fee”); and (b) 59.7% of the “Estimated
          Annual Operating Costs” (as defined below),
          which percentage the parties acknowledge and
          agree is based on the approximate square
          footage of the Airspace Improvements[5] divided
          by the sum of the approximate square footage
          of the Airspace Improvements and the Project


5“Airspace Improvements” are defined in the RECA as “a
combination of residential dwellings and individual sleeping rooms
attached to some of the residential dwellings.”
                                28
Improvements, excluding the square footage of
the parking garage and loading and delivery
facility within the Project Improvements and is
not subject to adjustment based on
remeasurement or otherwise. The Amenity
Access Fee is initially established at $167,500
per year, but may be increased from time to
time by the Project Owner in its ordinary
business judgment based upon circumstances
then prevailing. The Parties acknowledge and
agree that the Amenity Access Fee is a flat fee
in lieu of calculating the Airspace Lot Owner’s
share of those portions of the Operating Costs
related to operating the Amenities, and the
Estimated Annual Operating Costs do not
include any costs related to operating the
Amenities, as determined by the Project Owner
in its ordinary business judgment. The Parties
acknowledge and agree that there is no
operational history upon which to base the
first year’s Expense Payment and, based upon
estimated costs, the parties have determined
that from the date of this Agreement through
December 31, 2008, the Airspace Lot Owner’s
annual Expense Payment will be $1,975,853,
prorated based upon a 365-day year. Each
calendar year thereafter, prior to the start of
the calendar year, the Project Owner will
develop a budget estimating the total amount
of the year’s Operating Costs (excluding
Operating Costs for the Amenities) anticipated
to be incurred by the Project Owner in that
calendar year (the “Estimated Annual
Operating Costs”). At any time, the Project
Owner may cease charging the Amenity Access
Fee and, upon such event, may include all
Operating Costs related to the Amenities in the
Estimated Annual Operating Costs and the
                      29
            Airspace Lot Owner will pay its percentage
            share of such costs as part of the Expense
            Payment. The Airspace Lot Owner will pay
            each Expense Payment without demand or set-
            off, in equal installments due on the first day
            of each calendar quarter in such calendar
            year. Any failure or delay of the Project Owner
            in establishing or updating the amount of the
            Expense Payment for any calendar year will
            not be deemed a waiver, modification, or
            release of the right to so establish or update
            those installments, or of the obligation of the
            Airspace Lot Owner to pay installments of an
            Expense Payment prospectively.

¶ 45   The court made several interrelated conclusions affecting the

  expense payment due by the Association. First, the court

  concluded that “the [Vail Resorts]-owned facilities in which

  residential owners are granted an easement function as

  CCIOA-defined common elements.” Second, the “59.7%

  square-footage ratio was calculated without any reference to the

  RECA” or the formula set forth in section 6(b). Third,

            the data relied upon by [a Vail Resorts
            employee to establish the 59.7%] does not take
            into account over 70,000 square feet of
            building space . . . [and] contrary to the RECA
            formula, [Vail Resorts] excluded from this ratio
            several other areas of the Project
            Improvements such as the plaza and skating
            rink. By removing the square footage for these
            substantial areas of the Project Improvements

                                   30
             from the total (all of which are owned by [Vail
             Resorts]), [Vail Resorts] inflated the rate by
             which costs are allocated to the Association.

¶ 46   And fourth, “the [Vail Resorts’-]derived 59.7% is not supported

  by the evidence as being a fair representation of how the Project

  Space and the Airspace is allocated between the parties and . . .

  such analysis by [Vail Resorts] discriminates in favor of [Vail

  Resorts] at the expense of the Association.”

¶ 47   Under CCIOA, “[t]he declaration must state the formulas used

  to establish allocations of interest. Those allocations may not

  discriminate in favor of units owned by the declarant or an affiliate

  of the declarant.” § 38-33.3-207(2).

¶ 48   Vail Resorts contends the court erred in its interpretation

  because the RECA favors the Project Owner, not the declarant, in

  allocating 59.7% of costs to the Association. This is a similar

  argument to the one Vail Resorts made regarding the Airspace Lot

  Owner reserving the right to develop rather than the declarant. The

  fact remains that Vail Resorts is both the declarant and the Project

  Owner. Thus, when the Project Owner (Vail Resorts) discriminated

  in favor of itself by shifting approximately 60% of its costs to the


                                    31
  Association while in actuality owning approximately 50.9% of the

  Arrabelle, the declarant (Vail Resorts) was also doing so.

¶ 49    Vail Resorts relies on the amended UCIOA section 2-107

  comment 10 (Unif. Law Comm’n 2008), which interprets the 1982

  UCIOA, to support its position that the RECA does not discriminate

  in its favor:

              Questions have arisen concerning the drafters’
              intent regarding the language in subsection
              (b), which prohibits the declaration in
              allocating votes and common expense
              liabilities among the units, from
              “discriminating in favor of units owned by the
              declarant.” Specifically, the question is
              whether this section imposes a special level of
              scrutiny on the allocation of votes and
              common expense liability to units that the
              declarant may own, compared to similar units
              that are owned by persons who are not
              declarants.

              The answer is that the language means what it
              says: that is, if the allocated interests would
              change at the time the declarant sold the unit,
              then the allocated interests are improper
              because they discriminate in favor of the
              declarant’s ownership of that unit. However, if
              the allocation of common expenses and votes
              is permanent rather than dependent on the
              owner’s identity and one whose formula is
              identified in the declaration, then the
              allocation is proper. Subject to the obligations
              of good faith in Section 1-113 and the

                                     32
             prohibition on unconscionable terms in
             Section 1-112, this would be true even if the
             effect of the allocation were to create a relative
             benefit in favor of units that the declarant or
             its affiliates intend to own for an indefinite
             period.

¶ 50   To be sure, this comment suggests that as long as the Project

  Owner always benefits from the unfair allocation of costs between

  itself and the Airspace Lot Owner, the allocation is “proper.”

  However, the court not only determined that the cost allocation

  discriminated in favor of Vail Resorts because Vail Resorts excluded

  significant portions of the Project Lot from the cost allocation

  formula but also because the “59.7% square-footage ratio was

  calculated without any reference to the RECA” or the formula set

  forth in section 6(b). Consequently, the allocation of 59.7% in

  RECA section 6(b) violates the first sentence of section

  38-33.3-207(2) because the allocation did not match “the formulas

  used to establish allocations of interests.”

¶ 51   Moreover, the example in comment 10 goes on to describe a

  scenario which highlights how the RECA discriminates in favor of

  Vail Resorts.



                                     33
A common interest community consists of a
high-rise building containing 10 floors of equal
size. There are 4 units on each floor except
the top floor, where there is one 1 ‘penthouse’
unit. Even though the penthouse unit is four
times the size of the units on the 9 other
floors, and is clearly more valuable than the
other 36 units, the declaration allocates an
equal share of the common expenses to all the
units, including the penthouse unit. The effect
of this allocation is that the penthouse unit
bears a 1/37th share of the common expenses
— this is only 25% of the cost on a per square
foot basis — of the share borne by each unit
owner on a lower floor.

Assume that the declaration properly contains
the formula used for the allocation of common
expenses among the units and properly
discloses the material and unusual
circumstances that the penthouse benefits
substantially from the formula used to allocate
expenses.

The fact that the declarant intends to retain
ownership of the penthouse unit and live in
that unit for an indefinite period does not
mean that the standard contained in section
2-107(b) has been violated. However, the Act
would be violated if the declaration provided
that, upon the declarant’s sale of the
penthouse, the formula for allocating common
expenses would be changed to an allocation
among all the units based on their relative
sizes.

In the example, this appears to yield an unjust
result and a court might be invited to consider
the extent to which the declarant had acted in
                       34
             bad faith or unconscionably in making such an
             allocation. Nevertheless, any other rule would
             simply encourage challenges to any allocation
             of common expenses, since an argument can
             always be made that any allocation — whether
             done on relative size, number of rooms,
             “value”, location within a building, equality or
             any other basis — inevitably works to the
             relative disadvantage of some owners
             compared to others in the same community.

  UCIOA § 2-107 cmt. 10 (Unif. Law Comm’n 2008) (emphasis added).

¶ 52   Here, the RECA’s 59.7% allocation did not match “the formula

  used for the allocation of common expenses among the units” and

  did not “properly disclose[] the material and unusual

  circumstances” that Vail Resorts “benefit[ed] substantially from the

  formula used to allocate expenses.” This lack of transparency

  supports the court’s conclusion that section 6(b) was

  “unconscionable under CCIOA § 112”6 and discriminated in favor of

  units owned by Vail Resorts.



  6 Vail Resorts argues the trial court repudiated this finding in its
  Phase II Trial order. However, as we noted in footnote 2, the court
  did not revisit its earlier conclusions in the Phase II Trial. Instead,
  the Phase II Trial focused on the remaining claims and involved
  different evidence than the Phase I Trial. Accordingly, the trial
  court’s conclusion in the Phase I Trial order that RECA section 6(b)
  was unconscionable under section 38-33.3-112, C.R.S. 2015, is
  appropriate and valid.
                                    35
¶ 53   Because the 59.7% cost allocation to the Association did not

  correspond to the formula established in RECA section 6(b), and

  because that allocation discriminated in favor of Vail Resorts’

  Project Lot without properly disclosing that the allocation

  substantially benefitted that lot, we discern no error in the trial

  court’s conclusion to reform RECA section 6(b) pursuant to the

  Association’s expert’s recommendation based on as-built drawings

  of the Arrabelle.

                        B. Additional Reformations

¶ 54   The court ordered additional reformations to the RECA and

  the creation of a master association under section 38-33.3-220.

  Vail Resorts argues these actions exceeded the authority of the

  court. We disagree.

¶ 55   “The principles of law and equity . . . supplement the

  provisions of this article . . . .” § 38-33.3-108, C.R.S. 2015.

             The court, upon finding as a matter of law that
             a contract or contract clause relating to a
             common interest community was
             unconscionable at the time the contract was
             made, may refuse to enforce the contract,
             enforce the remainder of the contract without
             the unconscionable clause, or limit the


                                     36
             application of any unconscionable clause in
             order to avoid an unconscionable result.

  § 38-33.3-112(1). “The remedies provided by this article shall be

  liberally administered to the end that the aggrieved party is put in

  as good a position as if the other party had fully performed.”

  § 38-33.3-114(1), C.R.S. 2015.

¶ 56   “Reformation is an equitable remedy within the trial court’s

  discretion.” Davis v. GuideOne Mut. Ins. Co., 2012 COA 70M, ¶ 57;

  see CIGNA Corp. v. Amara, 563 U.S. 421, 440 (2011) (“The power to

  reform contracts (as contrasted with the power to enforce contracts

  as written) is a traditional power of an equity court, not a court of

  law, and was used to prevent fraud.”); Restatement (Third) of

  Property: Servitudes § 6.3 cmt. a (Am. Law Inst. 2000) (“The judicial

  power to authorize creation of an association is that of a court of

  equity with its attendant flexibility and discretion to fashion

  remedies to correct mistakes and oversights and to protect the

  public interest.”). A trial court abuses its discretion when its

  decision is manifestly arbitrary, unreasonable, or unfair, or when it

  misapplies the law. Landmark Towers Ass’n v. UMB Bank, N.A.,

  2016 COA 61, ¶ 31.

                                    37
¶ 57   At the conclusion of the Phase I Trial, the court ordered that

  “[i]f the parties are unable to draft or ratify a declaration without

  the Court’s assistance, this matter will be referred to a special

  master of the Court’s choosing, who will draft a declaration that

  shall, subject to the Court’s approval, be adopted as an Order of the

  Court.” The court similarly noted that “[i]f the parties cannot agree

  on how to allocate . . . utility costs without the Court’s assistance,

  the matter will be referred to a special master of the Court’s

  selection,” and “[i]f the parties cannot agree on how to allocate . . .

  recalculated costs without the Court’s direction . . . the matter will

  be referred to a special master of the Court’s selection.” Because

  the parties could not agree after a year, the court appointed a

  special master (recommended by Vail Resorts) who drafted the

  master association declaration and reforms to the RECA.

¶ 58   Vail Resorts specifically challenges the court’s reformations on

  parking, lobby expenses, utility costs, and mandatory arbitration.

  Parking, lobby, and utility costs all stem from RECA section 6(b),

  which the court concluded violated CCIOA section 38-33.3-207(2)

  and was unconscionable under section 38-33.3-112. These


                                     38
  conclusions supported reformation of the RECA. The court then

  attempted the fairest approach to reformation by looking at the

  requirements of CCIOA for guidance. See § 38-33.3-124 (alternative

  dispute resolution); § 38-33.3-315 (utilities). Indeed, the court

  simply placed Vail Resorts and the Association in the position they

  would have been had Vail Resorts initially created a

  CCIOA-compliant common interest community. While the ultimate

  reforms may have been based on permissive, rather than

  mandatory, terms recommended by CCIOA, we perceive no error in

  the court adopting those terms.

¶ 59   We also reject Vail Resorts’ argument of overreaching insofar

  as it relies on Hauer v. McMullin, 2015 COA 90 (cert. granted Mar.

  21, 2016). In Hauer, the question was whether several recorded

  documents could satisfy CCIOA’s requirement that common interest

  communities be formed by an assessment obligation described in a

  declaration. ¶ 27. The division, without citation to authority,

  stated that “[w]e reiterate the trial court’s conclusion that courts do

  not have the power to create an agreement for the members of a




                                    39
  homeowners association, or to create an association’s operational

  infrastructure.” ¶ 30.

¶ 60   First, CCIOA section 38-33.3-108 allows a court to use

  principles of law and equity to supplement CCIOA; this includes the

  court’s ability to create an association under certain circumstances.

  Indeed, the division in Hauer quoted the Restatement (Third) of

  Property: Servitudes section 6.2 comment c (Am. Law Inst. 2000),

  that “an association may be created . . . by a court under certain

  circumstances.” ¶ 20.

¶ 61   Second, the trial court in Hauer added a provision to the

  documents creating an implied common interest community; the

  court created the fractional interest of the common expenses for

  which each lot owner was responsible. ¶ 24.

¶ 62   Third, the quoted statement is not integral to Hauer’s

  conclusion and is, therefore, dicta. See Hardesty v. Pino, 222 P.3d

  336, 340 (Colo. App. 2009) (“[D]ictum does not become law of the

  case.”) (citation omitted).

¶ 63   And while Vail Resorts argues the trial court substituted its

  judgment for the judgment of the parties, we note the only party to


                                   40
  the original RECA was Vail Resorts itself. While the Association

  became the Airspace Lot Owner, there was never any initial

  agreement between Vail Resorts and the Association that the court

  disregarded. Moreover, the Association and Vail Resorts, having

  been afforded one year to resolves this matter, were unable to agree

  on reformations to the RECA. The litigation in this case had been

  ongoing for four years and the court had yet another phase of trial

  to conduct. See People v. Sandoval-Candelaria, 2014 CO 21, ¶ 26

  (“[O]ur cases make clear that trial courts have broad discretion to

  manage their dockets.”). We conclude that principles of equity

  support the trial court’s conclusion that these reformations were

  necessary for the RECA to comply with CCIOA, and we discern no

  abuse of discretion on the part of the trial court in appointing a

  special master and adopting his reformations.

             V. Conditional Cross-Appeal and Attorney Fees

¶ 64   Because we do not set aside any of the court’s reformations,

  we do not address the Association’s conditional cross-appeal

  seeking a determination that the Association validly terminated the

  RECA by e-mail notice to Vail Resorts in February 2009.


                                    41
¶ 65   Pursuant to C.A.R. 39.1 and RECA section 21, we award the

  Association the stipulated $300,000 in attorney fees for this appeal.

                             VI. Conclusion

¶ 66   The judgment is affirmed.

       JUDGE BOORAS and JUDGE MÁRQUEZ concur.




                                   42
