




2014 VT 120







Highridge Condominium Owners
Assoc. v. Killington/Pico Ski Resort Partners, LLC (2014-066)
 
2014 VT 120
 
[Filed 14-Nov-2014]
 
NOTICE:  This opinion is subject
to motions for reargument under V.R.A.P. 40 as well as formal revision before
publication in the Vermont Reports.  Readers are requested to notify the
Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by mail at: Vermont
Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors
in order that corrections may be made before this opinion goes to press.
 
 



2014 VT 120



 



No. 2014-066



 



Highridge Condominium Owners
  Association


Supreme Court




 


 




 


On Appeal from




     v.


Superior Court, Rutland Unit,




 


Civil Division




 


 




Killington/Pico Ski Resort
  Partners, LLC


October Term, 2014




 


 




 


 




William
  D. Cohen, J.




 



Christina A. Jensen and Carl H. Lisman of Lisman Leckerling,
P.C., Burlington, for 
  Plaintiff-Appellee.
 
Allan R. Keyes and Erin J. Gilmore of Ryan Smith &
Carbine, Ltd., Rutland, for
  Defendant-Appellant.
 
 
PRESENT:   Dooley, Skoglund and Robinson, JJ., and Hayes and
Zonay, Supr. JJ., 
                     Specially Assigned
 
 
¶ 1.            
ROBINSON, J.   This case arises from a dispute between developer
Killington/Pico Ski Resort Partners, LLC (“K/P”) and the Highridge Condominium
Owners Association concerning developer’s proposal to construct additional
units in the Highridge condominium development in Killington.[1] 
On cross-motions for summary judgment, the trial court granted declaratory
relief to the Association on the ground that the declaration of condominium did
not authorize the original developer to add additional units unilaterally, and
thus the alleged successor to the original developer’s rights, K/P, also had no
such right.  We conclude that K/P is the successor in interest to the original
developer with respect to development rights, and is entitled to construct the
proposed additional units under the declaration of condominium.  Accordingly,
we reverse.
I. 
¶ 2.            
The undisputed facts are as follows.  In 1983, the North Ridge
Development Corporation created Highridge Condominiums by a declaration of
condominium made under the Vermont Condominium Ownership Act, 27 V.S.A. §§
1301-1329.  North Ridge’s stated intent in the declaration was to
“develop and build a total of not more than two hundred fifty (250) Condominium
Units, with related road, parking areas, utilities, sewer and water lines, and
other common elements, amenities and facilities determined by Declarant to be
necessary or convenient for the condominium development.”  “In contemplation
of” this expressed intention, North Ridge submitted its right, title and
interest in the land in question to condominium ownership.  
¶ 3.            
The declaration expresses North Ridge’s intent, as declarant, “to
construct not more than two hundred fifty (250) Condominium Units in phases,
with those Units reflected in the Interim Schedule of Percentage Interests
filed with this Declaration to be constructed in the first phase and the
remaining Units to be constructed in subsequent phases as and when determined
by Declarant.”  The declaration describes the formula by which each unit
owner’s undivided interest in the common areas is to be calculated, and
provides, 
Notwithstanding
any contrary provision of this Declaration, if and in the event additional
phases are developed or other lands are annexed to the Project, Declarant
expressly reserves to itself, its successors and assigns, the right to amend
this Declaration from time to time so that the Interim and/or Final Percentage
Interest of a Unit Owner may be adjusted to reflect the additional Units, which
reservation is an express condition of ownership of Units in the condominium
and is senior to the conveyance and/or mortgage of such Units; by acceptance of
deeds of their Units, Unit Owners shall be deemed to have designated and
appointed Declarant as their attorney in fact for the sole, limited and
exclusive purpose of amending this Declaration in accordance with this section,
so that an Amendment filed by Declarant pursuant hereto shall result in the
amendment and reduction of such fractional interest without further action or
consent by Unit Owners. . . . The manner and formula for expressing percentage
interest of Unit Owners shall be consistently applied throughout each phase of
the development.
 
¶ 4.            
The declaration contemplates that upon construction of the final phase
of the development, the declarant shall file a “Schedule of Final Percentage Interest.” 
In furtherance of the phased development plan, North Ridge also reserved the
rights to add all or a portion of a specified parcel to the condominium as if
it were part of the dedication;[2]
to modify the site plan and floor plan in accordance with the phased
development; and to amend state and local land-use and development permits as
necessary, in its sole discretion, to permit the development and construction
of subsequent phases of the project.  
¶ 5.            
The declaration expressly provides: “This Declaration shall be binding
upon and inure to the benefit of Declarant and each and every party acquiring
ownership or an interest in any Unit subject to this Declaration and their heirs,
successors, or assigns.”  The declaration includes several other express reservations
by North Ridge that are not directly relevant to the issues in this case.
¶ 6.            
The declaration has been amended eleven times.  Most of these amendments
adjusted the interim percentage interests of condominium owners to reflect
North Ridge’s construction of additional units.  The most recent amendment was
executed in May 1990, five months after the Association took control of the
condominium in accordance with the declaration.  This amendment revised the
interim percentage-ownership interest schedule for a sixth time, to account for
the construction of additional units.
¶ 7.            
In April 1990, Vermont National Bank (“VNB”), which held a mortgage on the
Highridge Condominiums property, filed a complaint for foreclosure against
North Ridge. In March 1991, VNB secured a judgment and decree of foreclosure in
Highridge. By a limited warranty deed executed in June 1995, VNB conveyed the
lands that it received through the March 1991 foreclosure to Killington, Ltd.,
specifically identifying the judgment order and decree of foreclosure as the
source of the VNB’s interest in the property.  This deed stated that it
conveyed “[a]ll of the rights, title, and interest as Declarant in the
Highridge Condominiums” to Killington, Ltd.  Shortly thereafter, in August
1995, North Ridge executed a quitclaim deed directly to Killington, Ltd., conveying
all of its rights, title and interest as declarant in the Highridge
Condominiums.  In May 2007, Killington, Ltd. conveyed its interest in Highridge
to K/P by warranty deed.[3]
 This deed traced Killington Ltd.’s title through the 1991 foreclosure decree
and the VNB-to-Killington, Ltd. deed.
¶ 8.            
The current dispute between K/P and the Association arose in March 2011,
when K/P applied for approval from the Killington Planning Commission to build
additional units at Highridge.  The Association brought an action for declaratory
judgment, 12 V.S.A. § 4711, asserting that (1) the declaration did not
reserve any rights to additional development, and (2) even if the declaration
provided for additional development rights, K/P is not a successor to North
Ridge for purposes of the right to build additional units.[4]
¶ 9.            
On cross-motions for summary judgment, the trial court ruled for the
Association on the ground that the original declaration of condominium did not
give the declarant, then North Ridge, the power to build additional units
without the Association’s consent.  The court noted that the declaration “does
not expressly state that [North Ridge] reserves the right to construct
additional units at any time without the consent of the Association . . . [but]
only reserves the right to alter each unit owner’s percentage interest ‘if and
in the event that additional phases are developed or other lands are annexed to
the project.’”  Noting the presence of other clauses in the declaration in
which the original developer “expressly reserved rights to itself,” and the
absence of an explicit mention of reserved rights for further construction, the
trial court concluded that North Ridge “therefore did not reserve to itself the
unilateral right to construct additional units.”  The court also found
persuasive the fact that no additional units had been built at Highridge since
1990, concluding that this twenty-one year gap “between the last construction
of new units and the assertion of the right to build additional units
underlines that the parties did not, at least until K/P asserted its position
in 2011, contemplate the construction of additional units.”  K/P appealed.
II.
 
¶ 10.        
No facts are in dispute, and we review the trial court’s grant of summary
judgment “de novo under the same standard of review as the trial court.”  Madowitz
v. The Woods at Killington Owners’ Ass’n, 2010 VT 37, ¶ 9, 188 Vt. 197, 6 A.3d 1117.  The critical
questions in this case—the meaning and effect of the declaration of condominium,
and the impact of the foreclosure on the chain of title with respect to the
reservations in the declaration—are legal questions.  Creed v. Clogston,
2004 VT 34, ¶ 13, 176 Vt. 436, 852 A.2d 577 (interpretation of deed is question
of law which we review de novo); Golden Key, LLC v. Harper, 170 Vt. 641,
641, 751 A.2d 798, 799 (2000) (mem.) (interpretation of provision of
Condominium Ownership Act is question of law).
¶ 11.        
The first question is whether the original declarant, North Ridge,
retained the right to develop up to 250 units unilaterally, without the consent
of the existing owners.  If so, the second question is whether K/P has acquired
those development rights.
A.   
 
 
¶ 12.        
The Association argues that the underlying declaration did not allow the
original declarant, North Ridge, to build additional units without its
consent.  In particular, the Association argues that the right to build
additional units is distinct from the right to readjust unit owners’ percentage
interests in the common spaces, and a declarant must expressly reserve such
development rights in order to maintain them.  We reject the Association’s
argument, and find that the terms of the original declaration permit the
declarant to build up to 250 units without further consent from the
Association.
¶ 13.        
The statute pursuant to which the declaration of condominium was
executed offers little guidance.  The
declaration of condominium for Highridge was declared under the Vermont
Condominium Ownership Act, 27 V.S.A. §§ 1301–1329 (effective January 23,
1968), a first-generation condominium statute which does not address declarant
expansion rights.[5]
¶ 14.        
Because a declaration of
condominium is in the nature of a contract, we look to the intent of the
contracting parties, “which we presume is reflected in the contract’s language
when that language is clear.” Madowitz, 2010 VT 37, ¶ 12 (quoting R&G
Props., Inc. v. Column Fin., Inc., 2008 VT 113, ¶ 17, 184 Vt. 494, 968
A.2d 286).  We “give effect to the intent of the parties as it is expressed in
their writing,” Southwick v. City of Rutland, 2011 VT 53, ¶ 4, 190
Vt. 106, 35 A.3d 113, considering the instrument “as a whole and giv[ing]
effect to every part contained therein to arrive at a consistent, harmonious
meaning, if possible,” construing it so that “the intent of the parties”—or, in
this case, the declarant as executor—controls.  DeGraff v. Burnett, 2007
VT 95, ¶ 20, 182 Vt. 314, 939 A.2d 472 (citations omitted).
¶ 15.        
An ordinary person reading this declaration would easily understand that
it contemplates declarant’s addition of new units, and does not require the
Association’s approval.  The declaration specifically provides that the
declarant “intends to construct not more than two hundred fifty (250)
condominium units in phases . . . as and when determined by
Declarant.”  The declaration establishes unit owners’ consent to readjustment
of their percentage interests in the common areas and facilities to accommodate
the future construction of additional units as a condition of their ownership;
reserves to the declarant the right to make those adjustments unilaterally; and
lays out the procedure whereby the declarant is to adjust those interests with
each successive round of development.  And the declaration reserves the
declarant’s rights to alter the site plans and seek permits to facilitate the
contemplated phased development—all on its own without further consent by the
Association or individual unit owners.  
¶ 16.        
The Association has noted that prior amendments to the declaration to
reflect the addition of new units occurred before it was formed and took over
powers with respect to the existing condominiums, suggesting that after the
Association’s formation such amendments require its approval.  Nothing in the
declaration or the Condominium Ownership Act, 27 V.S.A. § 1301 et seq.,
gives the Association such a power or a power to block future development of
land not within the condominium common area.  The condominium site owners, and
not the Association, own undivided interests in the common areas.  27 V.S.A. §§
1305, 1306(a).  The Association’s powers relate to the “administration of the
property.”  Id. § 1319(12).  Nothing in the declaration’s provisions
concerning the powers of the owners’ association suggests that when the
Association assumes the enumerated powers listed in the declaration, the
Association also acquires the right to develop, or block development of the
remaining units contemplated in the declaration. We conclude that the presence
of the Association, and the timing of its formation, is irrelevant to the issue
before us.
¶ 17.        
Considering the instrument as a whole to give effect to its intent and
purpose, DeGraff, 2007 VT 95, ¶ 20, and considering the “obvious
purpose” of the drafter of the instrument, Myrtle Rebekah Lodge No. 6 v.
Cavendish Library Trs., 169 Vt. 553, 556, 726 A.2d 86, 88 (1999) (mem.)
(quoting Hoadley v. Hoadley, 114 Vt. 75, 80, 39 A.2d 769, 773 (1944)),
we conclude that the declarant clearly reserved to itself the right to expand
the condominium up to the stated maximum number of units, and to adjust
fractional ownership of the common facilities correspondingly.
¶ 18.        
This case is on all fours with Madowitz v. The Woods at Killington
Owners’ Ass’n.  In Madowitz, like the present case, a condominium
owners’ association challenged a developer’s proposal to further develop a
condominium complex.  2010 VT 37, ¶ 1.  There, as here, the “unambiguous
language” of the declaration “explicitly grants to developers the necessary
consent of each unit owner to additions to the development that would result in
a change in each owner’s percentage interest in the common areas and
facilities,” so that “the designated value of each unit would change upon
completion of each subsequent phase of development.”  Id. ¶ 13. 
Given this clear expression in the declaration, we concluded that the developer
had “the right to continue with their phased development plans,” and “[n]o
further contracts or agreements were necessary to effect the intent of the
parties that the developers continue phased development of the [development].”  Id.
¶ 15.  The language of the declaration that we relied on in Madowitz—reserving
the declarant’s right to unilaterally adjust unit owners’ fractional interests—was
functionally the same as the language at issue here.
¶ 19.        
K/P’s claim here is actually stronger than that of the developer in Madowitz. 
In Madowitz, a deed provision in 105 of the 107 conveyances from the
original developer to unit owners, as well as powers of attorney executed by
two unit owners, purported to place a ten-year limit on developer’s rights, in
direct contradiction to the language of the declaration.  Id. ¶¶ 16-22. 
We concluded that because declarations prevail over subsequent deeds and powers
of attorney, the developer’s rights to develop outlived the ten-year limit
reflected in the deeds and powers of attorney.  Id. ¶¶ 23-24.
¶ 20.        
Nor does the passage of time since the last round of development, and
the fact that the development between 1985 and 1990 was always done “with the
acquiescence of the Association,” alter our analysis.[6]
 The development rights established in the declaration were not time-limited.  Contrast
with 27A V.S.A. § 2-105(a)(8) (provision of the Vermont Uniform Common
Interest Ownership Act of 1994 requiring declaration for a common-interest
community to include description of various declarant rights, including
reserved development rights, “and a time limit within which each right shall be
exercised”).
¶ 21.        
The Association’s acquiescence to North
Ridge’s early phases of development is immaterial.  As we recognized in Madowitz, “a declaration or ‘master deed’
effectively trumps individual deed restrictions,” and thus limitations on
development rights in subsequent deeds do not undercut declarants’ development
rights as set forth in the declaration.  2010 VT 37, ¶ 23.  Given that limitations
on future development rights written into subsequent deeds must give way to the
declaration itself, mere informal suppositions that expansion will not occur in
the future simply because it has not occurred in the recent past most certainly
cannot alter the rights established in the declaration.
¶ 22.        
Moreover, while course of performance may be relevant in interpreting an
ambiguous contract, see, e.g., Isbrandtsen v. N. Branch Corp., 150 Vt.
575, 577-80, 556 A.2d 81, 83-85 (1988); Restatement (Second) of Contracts §§ 202(4)-(5),
212 cmt. b (1981), the declaration in this case is unambiguous.  See In re
Rosenberg, 2010 VT 76, ¶ 14, 188 Vt. 598, 11 A.3d 651 (mem.) (“Although
we have recognized that in some instances an ‘implied contractual provision may
arise through established past practices,’ a construction considering such
extrinsic evidence may not proceed without first finding ambiguity in the
contract”) (citation omitted); Madowitz, 2010 VT 37, ¶ 14 n.7
(“[T]he unit owners had constructive notice—through various declaration
provisions—both that [the condominium] would be subject to future development
and that the owners’ percentage interest in the common areas would change as
each new unit was added.”).
B.
¶ 23.        
The Association further argues that, assuming the original declarant had
the right to build additional units, K/P did not succeed to that right.  The
Association points out that the original declaration expressly reserved various
specific rights not only to the original declarant, North Ridge, but also to
its successors and assigns, but in the discussion of the declarant’s intention
to construct additional units in phases, by contrast, the declaration merely
anticipates future construction “as and when determined by Declarant,” with no
reference to North Ridge’s successors and assigns.[7]
¶ 24.        
We disagree, and find no difficulty in determining that the declaration
provides for the original declarant’s successor in interest to succeed to the
declarant’s development rights.  The declaration expressly provides that the declaration
“shall be binding upon and inure to the benefit of Declarant and each and every
party acquiring ownership or an interest in any Unit subject to this
Declaration and their heirs, successors, or assigns” (emphasis added).  Moreover,
the express reservation concerning development rights that is most pertinent to
our analysis—the right to amend the declaration to adjust unit owners’
respective percentage interests in the common areas and facilities to account
for the construction of additional units—is expressly reserved to declarant and
“its successors and assigns.”  When the meaning of a declaration is “clear and
unambiguous, . . . ‘the instrument must be given effect according to its terms.’ ”
 Creed, 2004 VT 34 ¶ 13 (quoting Aiken v. Clark, 117 Vt. 391,
393, 92 A.2d 620, 621 (1952)).  Accordingly, we conclude that K/P has succeeded
to the development rights reserved to the original declarant, North Ridge, in
the declaration of condominium.
¶ 25.        
In sum, we find that K/P is the
successor-in-interest to North Ridge’s rights under the declaration of
condominium, and that those rights include the right to add units up to the 250-unit
maximum expressed in the declaration without the consent of the Association.
            Reversed and remanded
to the Superior Court, Civil Division, Rutland Unit, with instructions to enter
judgment for Killington/Pico Ski Resort Partners, LLC, declaring that it holds
the right to add units to the Highridge Condominiums without Association
consent, up to the 250-unit limit stated in the declaration.      
 
 



 


 


FOR THE COURT:




 


 


 




 


 


 




 


 


 




 


 


Associate
  Justice



 




[1]
 Older documents in the record refer to the Town of Sherburne.  In 1999, the
Town of Sherburne was renamed the Town of Killington, following a petition by the
people of Sherburne to the Legislature.  1999, No.
M-3, § 3.


[2]
 Originally, Highridge consisted of a ten-acre parcel that was conveyed to the
Corporation by a deed of July 21, 1983; the following year, a 26.64-acre parcel
was added through conveyance to North Ridge in a deed of July 31, 1984,
bringing the total size of the site to 36.64 acres. 


[3]
 The deed’s grantees were actually MTB Killington, LLC, AMSC Killington, LLC,
and SP II Resort LLC as tenants in common with 13.6%, 66.4%, and 20% interests,
respectively. Both parties treat these entities as synonymous with K/P, and we
follow suit.  
 


[4]
 The Association also argued below that even if K/P did succeed to the original
owner’s rights and those rights included the right to additional development, such
rights expired or were terminated.  It has not pressed that argument on appeal.


[5]
 The statute did require that the declaration state the value of each site, and
the percentage of undivided interest in the common areas and facilities
appertaining to each site, 27 V.S.A. § 1311(6), and further provided that “[t]he
percentage of the undivided interest of each apartment or site owner in the
common areas and facilities as expressed in the declaration shall have a
permanent character.”  Id. § 1306(b).  But it contemplated that the
percentage interests could be changed by consent of all the site owners
expressed in an amended declaration.  Id.  This Court affirmed in Madowitz
that a developer can secure the statutorily required consent of the owners in
advance, as a condition of purchasing a unit.  2010 VT 37, ¶¶ 13-15.  This
procedure helps facilitate phased development.  Id.  The newer Vermont
Common Interest Ownership Act, 27A §§ 1-101 to 4-120 (effective January 1,
1999), addresses future development with more specificity.  See, e.g., 27A
V.S.A. § 2-105(a)(4) (declaration must contain a “statement of the maximum
number of units which the declarant reserves the right to create”).


[6]
 The trial court cited both of these facts in support of its conclusion.


[7]
 The Association’s argument on this point has morphed considerably since its
motion for summary judgment before the trial court.  Below, the Association
argued that a purchaser of land from a bank following a foreclosure is not a
successor or assign of the former owner’s contractual development rights.  The
Association argued that because K/P traces its title to the Highridge Condominiums
through the 1995 warranty deed from VNB to Killington, Ltd. and the 1991
foreclosure decree under which VNB acquired the property, K/P did not acquire
the development rights to Highridge Condominiums through that chain of title. 
K/P countered that if VNB did not acquire the development rights to Highridge
through the 1991 foreclosure, then K/P has succeeded to those rights through
the 1995 quitclaim deed directly from North Ridge to Killington, Ltd.  The
Association has abandoned this formulation of the argument on appeal, and we
need not reach the question of whether K/P acquired the development rights in
question through the foreclosure/VNB deed chain or, alternatively, through the
quitclaim deed directly from North Ridge.


