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Friday, September 21, 2012

HOA pays fees in parking-space case

By Deborah Elkins
Published: September 21, 2012
Tags: Justice William C. Mims, Real Estate, Supreme Court of Virginia

A homeowners’ association Declaration that allowed assignment of “a maximum of two parking spaces” within the common area requires spaces to be assigned equally among all lot owners, not unequally allocated among owners with and without garages, and the Supreme Court of Virginia upholds a circuit court decision for plaintiff owners as well as an award of attorney’s fees to plaintiffs under Va. Code § 55-515(A).

The HOA first challenges the circuit court’s interpretation of the Declaration and its conclusion that parking in the common area must be assigned to all lot owners equally if assigned at all. Although the HOA argues that nothing in the Declaration requires that parking spaces in the common area be assigned equally, equality is inherent in the definition of a common area. The HOA must assign parking spaces in the common area to all lot owners equally, if at all, unless the Declaration expressly provides otherwise. Nothing in the original Declaration does so, including its definition of “Common Area.” Consequently, Sully Station II Comm’y Ass’n Inc. v. Dye, 259 Va. 282 (2000), controls the outcome on this issue. The circuit court did not err in ruling that the Declaration requires that parking spaces in the common area be assigned equally among all lot owners, and that portion of the judgment is affirmed.

The HOA next challenges the circuit court’s decision that a December 2009 Amendment to the Declaration is invalid. Specifically, the HOA challenges rulings that the Declaration does not authorize the use of proxies to enact amendments; the Amendment effected a partition of the common area and therefore required written approval by two-thirds of the lot owners and their mortgagees; and the Amendment effected a forfeiture or revocation of the recorded easement rights of the owners of Garaged Lots in derogation of their titles. However, these assignments of error contest only three of the six bases for the lower court’s ruling.

The circuit court determined the meeting at which the Amendment was adopted was improper because the HOA provided inadequate notice under the Declaration. Without reviewing the correctness of that determination, we are satisfied that, if correct, it would render the Amendment invalid because a meeting of a corporation held upon inadequate notice is an improper meeting and the corporate acts undertaken therein are invalid as a matter of law. This ground forms a separate and independent basis to affirm the circuit court ruling that the Amendment was invalid and we will not reverse it.

There is, however, no evidence in the record supporting the award of compensatory damages for diminution of property value, and that portion of the circuit court’s judgment must be reversed.

We will affirm the award of compensatory damages for the portion of the assessments attributable to maintenance of the common area but reverse an award to one plaintiff owner for apportioned real property taxes. The circuit court did not abuse its discretion in admitting testimony of another plaintiff owner, a former member of the HOA board of directors, about the amount of each month’s assessment that went to maintenance of the common area.

Plaintiffs are entitled under Va. Code § 55-515(A) to an award of $188,840.69 in costs and fees on their breach of contract claim. Plaintiffs’ expert witness testified the claims for declaratory and injunctive relief and for breach of contract were inseparable because they both involved the HOA’s powers under the Declaration. The contract claim largely subsumes the claim for a declaratory judgment because the circuit court was required to ascertain what the Declaration required in order to determine whether the HOA had breached it. Plaintiffs identified entries on their invoices associated with the unsuccessful fiduciary duty claim and excluded $5,767 from the amount of fees sought. We are satisfied the circuit court did not make a clear error of judgment in awarding these fees.

Affirmed in part and final judgment, reversed in part and remanded for a determination and award of reasonable costs and attorney’s fees incurred by plaintiffs subsequent to entry of the judgment appealed from.

Manchester Homeowners Ass’n Inc. v. Batt (Mims) No. 111949, Sept. 14, 2012; Fairfax Cir.Ct. (Bellows) Maria J. Diaz, Andrew J. Terrell for appellant; David Ludwig, Ellis Bennett for appellees. VLW 012-6-133, 29 pp.

Interesting decision.

Tucker Griffin Barnes
Charlottesville, VA (434-973-7474)

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