Kinni Kinnic Vill., Inc. v. Saltis, No. 894-11-09 Rdcv (Cohen, J., Apr. 6, 2010)

[The text of this Vermont trial court opinion is unofficial. It has been reformatted from the original. The accuracy of the text and the
accompanying data included in the Vermont trial court opinion database is not guaranteed.]
                                                STATE OF VERMONT
                                                 RUTLAND COUNTY

                                                                                )
KINNI KINNIC VILLAGE, INC.,                                                     )          Rutland Superior Court
d/b/a KINNI KINNIC ASSOCIATION,                                                 )          Docket No. 894-11-09 Rdcv
                                                                                )
                                             Plaintiff,                         )
                                                                                )
v.                                                                              )
                                                                                )
GEORGE M. SALTIS, SR.,                                                          )
and DIANE SALTIS,                                                               )
                                                                                )
                                             Defendants                         )


      DECISION ON SMALL CLAIMS APPEAL, FILED NOVEMBER 30, 2009

           Plaintiff Kinni Kinnic Village, Inc. (the Association) appeals from the decision of

the Small Claims Court, in which it found in favor of the defendants George and Diane

Saltis. This case arises out of the Saltises’ placement of a boat lift in Lake St. Catherine,

off of the dock of the Association at the common beach area, in violation of the

Association’s rules and regulations. The Association is represented by Tracee Oakman

Rupe, Esq. George and Diane Saltis are represented by Christopher H. Howe, Esq.

                                                     BACKGROUND

           Kinni Kinnic Village, Inc., d/b/a Kinni Kinnic Association is a condominium

development near the shore of Lake St. Catherine. It consists of twenty-two individually

owned lots, together with an undivided interest in the common area consisting of the

beach on the shore, the tennis courts, and private roads throughout the subdivision. The

Association also has a dock on the lake, which its members may use for a yearly fee.

George and Catherine Saltis are the owners of two lots and are members of the

Association.
        The By-Laws of the Association were enacted in July 1983. Since then, there

have been multiple official amendments to the Declaration of Covenants and Bylaws and

Rules and Regulations adopted by the Association.

        According to § 2.20 of the rules, the annual dock usage fee is $150 and is due it at

the time of the annual association dues. Section 2.24 sets forth boat lift restrictions at the

common beach area, including: (1) no personal boat lift equipment shall be utilized at the

Association common beach; and (2) permission granted to members in 2002 to install

boat lifts in two slips is revoked.

        Section 2.25 sets forth a boat slip agreement which every member of the

Association is required to sign if he or she chose to use the boat slips in the dock. It states

that “[a]ll powered water craft must be properly moored or stored within one of the 8 boat

slips provided at the common beach front.” The agreement further sets forth that non-

compliance with the regulations results in the Board issuing a notice of non-compliance

and that the Board requires compliance within 5 days from notification of violation.

Continued failure to comply after the 5 days results in a $20 fine per day for each day of

non-compliance.

        In 2005, the Saltises placed a boat lift in a slip and a second boat lift outside of a

slip, at the end of the dock. In 2006, the Association Board voted to revoke the use of

boat lifts for powered water craft at the common beach area. The Saltises continued to

maintain one boat in the boat slip, which they paid for, and a second lift for jet skis

outside of a slip, at the end of the dock, which they did not pay for.

        In January 2006 the Saltises received a bill for the dues on their two lots and a

notice for boat slips. The Association sent the two-page Boat Slip Agreement to its




                                               2
membership, setting forth the rules and regulations of the dock and common beach area.

A copy of the agreement was to be signed and returned with the $150 dock fee if a

member chose to use the dock.

       In January 2006, the Saltises sent a check for $550 to the Association for their

dues and the dues for one boat slip. The check was returned by the Association treasurer,

who requested two separate checks for association dues and slip dues by February. The

Saltises then sent two separate checks. However, they also returned the boat slip

agreement with certain sections crossed out and marked up with additional language.

Specifically, the Saltises crossed out the sentence requiring that all motorized craft be

stored in a slip. They also crossed out the whole section regarding penalties for non-

compliance with the rules and regulations. The Board refused to accept payment for the

boat slip and requested an unmarked boat slip agreement, along with two checks for dues

and for payment of the boat slip.

       The Saltises did not comply with the Board’s request. On July 13, 2006, the

Board sent the Saltises a notice of non-compliance, stating that they were in violation of

the rules by (1) placing a boat lift at the common beach area in violation of Rule 2.24; (2)

using the dock without signing the boat slip agreement form and without paying the dock

usage fee; (3) maintaining a boat at the common beach area other than in a boat slip; and

(4) use of the common land when association dues had not been paid. The Board

requested that the Saltises remove the boat lift from the common beach area, and sign the

boat slip agreement and send payment. A hearing was set for July 22nd. The notice also

stated that a finding of non-compliance with Rule 2.24 by the Board would result in a

fine of $20 a day for each day of non-compliance, commencing the day after the hearing.




                                              3
       The hearing was held with the Saltises present. Again, the Board requested that

the Saltises remove the boat lift, sign the agreement, and pay their dues. The Saltises

continued to maintain their boat in the boat lift through October 2006, even after the dock

had been removed for the year. On July 23rd, the Board began assessing fines against the

Saltises for violations of the rules and regulations. These fines continued through October

7th.

       The Association brought the instant action to recover dues, assessments, fines,

and attorney’s fees. On November 2, 2009, the Small Claims Court issued its Opinion

and Decision, finding in favor of the Saltises. The Associations now appeals from that

decision.

                                      DISCUSSION

       On appeal of a small claims court decision, this Court’s standard of review is one

of high deference. The Court is limited to questions of law, V.R.S.C.P. 10(d), and must

be mindful that small claims court exists “to secure the simple, informal, and inexpensive

disposition” of claims. V.R.S.C.P. 1. Small claims court findings “must be construed,

where possible, to support the judgment” and the procedural informality of small claims

does not authorize an appellate court to make its own substantive findings. Kopelman v.

Schwag, 145 Vt. 212, 214 (1984). Small claims court findings, however, must be

supported by the evidence. Brandon v. Richmond, 144 Vt. 496, 498 (1984).

       The court found that the Association’s dock was 52 feet long and thus required a

permit under 29 V.S.A. § 403(b)(1)(A), which sets forth a permit exception for docks that

do not exceed 50 feet. The court also found that the Saltises’ boat lift was placed at the

end of the dock, beyond 50 feet. The court held that the Association’s rules and




                                              4
regulations pertaining to the dock and boat slips could not be legally enforced beyond the

50 foot portion of its dock.

       The length of the Association’s dock is not determinative for the purposes of this

case. The Vermont Public Trust Doctrine is inapplicable here and does not limit the

ability of a condominium association to regulate the conduct of its members at the

common beach area.

       Here, the parties’ actions are governed by the Declaration of Covenants and

Bylaws and Rules and Regulations—a private agreement entered into by all lot owners at

Kinni Kinnic Village. The Vermont Common Interest Ownership Act provides that an

association has the power to adopt and amend bylaws and rules and regulations, to

regulate the use of common elements, and to impose reasonable fines for violations of the

declaration, bylaws and rules and regulations of the association. 27A § 3-102(a). The

Court understands the Saltises primarily to be challenging the wisdom of the Board’s

decision to adopt and enforce § 2.24 of the rules and regulations as it has.

       Vermont cases have not set out the applicable legal standard regarding a board’s

decision to enforce the association’s rules. Several out-of-state cases, however, have

proceeded by applying a deferential standard of review to a board’s actions analogous to

the business-judgment rule of corporate law. See Levandusky v. One Fifth Avenue

Apartment Corp., 553 N.E.2d 1317, 1320-23 (N.Y. 1990) (exhaustively analyzing and

then adopting the business-judgment rule in this context). “Generally, courts will uphold

decisions made by the governing board of an owners association as long as they represent

good-faith efforts to further the purposes of the common interest development, are

consistent with the development’s governing documents, and comply with public policy.”




                                             5
Riverside Park Condominiums Unit Owners Association v. Lucas, 691 N.W.2d 862, 871

(N.D. 2005).

       Substantially for the reasons set forth in Levandusky, the Court adopts the

business-judgment rule for use in this context. This prevents the Court from being put in

the undesirable position of attempting to second-guess board decisions on the issues

affecting the association generally and its members personally.

       Here, the Association provided undisputed evidence that the Saltises violated

§ 2.24 by placing a boat lift at the end of the Association’s dock at the common beach

area, placing a motorized water craft in the lift, and refusing to remove it. Furthermore, it

is undisputed that the Saltises did not properly pay their dock fees for their boat slip

because they refused to sign the boat slip agreement along with it.

       Thus, the Board was justified in levying fines against the Saltises pursuant to the

rules and regulations and the boat slip agreement. The Association is entitled to collect

these fines. Also, the Association shall be entitled to an award of costs and reasonable

attorney fees incurred in attempting to collect these fines. See 27A V.S.A. § 3-116(g).

                                          ORDER

       For the foregoing reasons, the matter is REVERSED and REMANDED for a

determination by the Small Claim Court solely as to the issues of:

       (1) The amount of fines incurred by George and Diane Saltis in 2006; and

       (2) The costs and reasonable attorney fees incurred by Kinni Kinnic Village in
           attempting to collect those fines.

       Dated at Rutland, Vermont this _____ day of ________________, 2010.

                                                       ____________________
                                                       Hon. William Cohen
                                                       Superior Court Judge


                                              6
