e at Seventeenth Avenue Owners Association v. Nelson , 2021 COA 78 ( 2021 )

The summaries of the Colorado Court of Appeals published opinions
constitute no part of the opinion of the division but have been prepared by
the division for the convenience of the reader. The summaries may not be
cited or relied upon as they are not the official language of the division.
Any discrepancy between the language in the summary and in the opinion
should be resolved in favor of the language in the opinion.
SUMMARY
June 3, 2021
2021COA78
No. 19CA2052, Briargate at Seventeenth Avenue Owners
Association v. Nelson — Real Property — Common Interest
Communities — Colorado Common Interest Ownership Act;
Creditors and Debtors — Accord and Satisfaction — Setoff
A division of the court of appeals considers whether a
homeowner may offset what he owes in assessments to a
homeowners’ association (HOA) against what the HOA owes him
from judgments entered in prior court cases. The division
concludes that any common law right in the homeowner to offset
damages is barred by the public policy of Colorado’s Common
Interest Ownership Act (CCIOA), sections 38-33.3-101 to -402,
C.R.S. 2020.
The division also determines that (1) the homeowner’s practice
of using restrictive endorsements on checks to the HOA, without
regard to whether a dispute existed, was indicative of a lack of good
faith undermining the homeowner’s reliance on the defense of
accord and satisfaction set forth in section 4-3-311, C.R.S. 2020, of
the Colorado Uniform Commercial Code; (2) the HOA was entitled to
reject checks with restrictive endorsements on them; (3) the
homeowner’s obligations with respect to the rejected checks were
suspended from the time the checks were “taken” by the HOA until
they were rejected by the HOA; and (4) the HOA, as the prevailing
party, was entitled to reasonable attorney fees and costs. The
division reverses a relatively minor part of the judgment and
remands the matter for a recalculation of damages.
COLORADO COURT OF APPEALS 2021COA78
Court of Appeals No. 19CA2052
City and County of Denver District Court No. 18CV32628
Honorable Kandace C. Gerdes, Judge
Briargate at Seventeenth Avenue Owners Association, a Colorado non-profit
corporation,
Plaintiff-Appellee,
v.
John G. Nelson,
Defendant-Appellant.
JUDGMENT AFFIRMED IN PART, REVERSED IN PART,
ORDER AFFIRMED, AND CASE REMANDED WITH DIRECTIONS
Division I
Opinion by JUDGE DAILEY
Freyre and Yun, JJ., concur
Announced June 3, 2021
Winzenburg, Leff, Purvis & Payne, LLP, Wendy F. Weigler, Littleton, Colorado,
for Plaintiff-Appellee
Law Office of John G. Nelson, John G. Nelson, Denver, Colorado, for
Defendant-Appellant
¶1 In this action to collect unpaid homeowners’ association (HOA)
assessments, defendant, John G. Nelson, appeals the trial court’s
entry of judgment in favor of, and award of attorney fees and costs
to, plaintiff, Briargate at Seventeenth Avenue Owners Association
(Briargate). We affirm in part, reverse in part, and remand with
directions.
I. Background
¶2 Briargate is the HOA for certain condominiums in Denver.
Nelson has been one of the condominium owners since 2002.
¶3 The parties previously engaged in litigation, resulting in money
judgments in favor of Nelson.
¶4 Briargate brought the present action in July 2018 to recover
alleged unpaid assessments, interest, collection costs, and attorney
fees.
¶5 Three years earlier, Briargate had adopted a resolution
(February 2015 Resolution) providing that (1) balances left unpaid
for ten days would accrue a monthly late fee of $50, an 8% per
annum interest rate, and service fees; (2) it could collect attorney
fees for legal actions to recover unpaid balances; and (3) owners’
payments to Briargate would be allocated in the following order:
1
legal fees and costs, enforcement and collection expenses, late fees,
returned check charges, lien fees, any costs and fees pursuant to
the “Declaration [of the HOA],” and lastly regular or special
assessments.
¶6 In January 2016, Nelson began paying Briargate his monthly
HOA assessments with checks containing a handwritten notation in
the memo line saying either “HOA Account — Payment in Full” or
“HOA Account + Payment in Full.” He did this, he said, because
Briargate (1) had used “concerning” accounting practices in the past
and (2) changed management companies, making it no longer
feasible for him to pay his bills in person and obtain paper receipts
in return.
¶7 Nelson’s account with Briargate had a zero balance as of June
30, 2016. But earlier, in February 2016, Briargate had notified its
members in a letter that (1) a special assessment for an insurance
deductible on a new roof was necessary and (2) “[e]ach owner is
responsible for their portion of the deductible according to your
2
ownership percentage. Your percentage, and the amount due, is
listed on the enclosed statement.”1
¶8 When Nelson had not paid the special assessment by
September 21, 2016, Briargate (1) notified him in a letter that his
account was “delinquent” in the amount of $984.99; and (2)
attached to the letter a page from a ledger showing Nelson owed
$905, plus a late fee and interest, in connection with the “Insurance
Deductible.” Thereafter, Briargate again notified Nelson via letter
(this time through certified mail) of the delinquency and twice in the
form of a debt collection notice pursuant to section 38-33.3-316.3,
C.R.S. 2020.
¶9 Between June 2016 and March 2017, Nelson sent Briargate
nine handwritten checks, all for his regular monthly assessments
and each containing a restrictive endorsement of the type
mentioned above. (During this time, the only payments Nelson did
not make to Briargate were for the $905 special assessment and
1According to Nelson, he never received the letter. He admitted,
however, hearing a rumor about the roof assessment in the spring
or early summer of 2016.
3
late fees and interest attached to it.) Briargate deposited all nine of
these checks.
¶ 10 Nelson sent two more checks, just like the previous nine, in
April and May 2017. However, Briargate returned these checks to
Nelson. In a letter dated June 5, 2017, Briargate notified Nelson
that it rejected, and consequently was returning, his April and May
2017 checks “due to the[ir] restrictive endorsement[s].”
¶ 11 Nelson responded on June 10, 2017, in a letter informing
Briargate that, rather than continuing to pay his account by check,
he would (1) “start setting off monthly payments against the various
judgments [he] hold[s] against the HOA” and (2) resume making
payments by check when the balance of those judgments had been
satisfied.
¶ 12 Between June 2017 and July 2018, Briargate continued to
assess late fees and interest on Nelson’s account. It also added a
second special assessment (totaling $10,860) to Nelson’s account.
Nelson attempted to pay that special assessment with two checks,
4
one in October 2018 and one in November 2018.2 Briargate
returned his checks because (1) the October 2018 check bore a
“Oct. HOA + Sp. Assessment” notation; and (2) the November 2018
check was accompanied by a letter that said, “This check is
intended to cover my Nov. HOA fees plus the final eighteen
installments on the special assessment.” Briargate rejected those
checks because Nelson had directed that they be applied in a
manner contrary to the allocation specified in the February 2015
Resolution.
¶ 13 Nelson did not attempt to make any other payments but
continued to “offset” amounts Briargate claimed were owed to it
against the amount of the judgments owed to him.
¶ 14 The parties went to trial in June 2019. Nelson, a licensed
attorney, represented himself. At the conclusion of the trial, the
parties submitted written closing arguments. As pertinent here,
Nelson argued that (1) Briargate’s acceptance of checks between
2 The checks were for $937.34 and $8,607.44, respectively.
Although, as noted above, Nelson’s portion of the special
assessment was $10,860, these attempted two payments (which
were also inclusive of his regular monthly HOA assessments)
totaled only $9,544.78.
5
June 2016 and March 2017, each with a restrictive endorsement,
effected an accord and satisfaction of any prior debt; (2) Briargate’s
nonaction with respect to, and ultimate rejection of, two checks —
each of which had similar restrictions attached to it — operated to
suspend any ongoing obligation; and (3) in any and all events, he
was entitled to offset amounts he owed Briargate against amounts
Briargate owed him from prior judgments.
¶ 15 In a written “Findings of Fact, Conclusions of Law, and Order,”
the trial court rejected Nelson’s arguments. After determining that
Nelson had unjustifiably breached his contractual obligations under
the Declaration, the court entered judgment for Briargate and
against Nelson for $21,467.48, plus 8% per annum prejudgment
interest. And, finding that Briargate was the prevailing party, the
court ordered Nelson to pay Briargate $19,219.68 in attorney fees
and costs.
¶ 16 Nelson now appeals the trial court’s judgment and order.
II. Accord and Satisfaction
¶ 17 Nelson contends that the trial court erred by rejecting his
defense of accord and satisfaction. We disagree.
6
¶ 18 Whether an accord and satisfaction exists presents a question
of fact, R.A. Reither Constr., Inc. v. Wheatland Rural Elec. Ass’n, 680
P.2d 1342, 1344 (Colo. App. 1984), upon which a trial court’s
finding would ordinarily be subject to reversal only for clear error,
see Indian Mountain Corp. v. Indian Mountain Metro. Dist., 2016
COA 118M, ¶ 31.3 However, whether the court has applied the
correct legal standard in making a finding of fact is a question of
law that we review de novo. In Interest of C.T.G., 179 P.3d 213, 221
(Colo. App. 2007).
¶ 19 “An accord is a contract under which an obligee promises to
accept a stated performance in satisfaction of the obligor’s existing
duty. Performance of the accord discharges the original duty.” R.A.
Reither Constr., 680 P.2d at 1344. To establish an accord and
satisfaction,
it is necessary that the money should be
offered in full satisfaction of the demand, and
be accompanied by such acts and declarations
as amount to a condition that the money, if
3A trial court’s finding of fact is “clearly erroneous” if (1) it lacks
support in the record; or (2) though it has some support in the
evidence, “we are nonetheless left, after a review of the entire
evidence, with the firm and definite conviction that a mistake has
been made.” Indian Mountain Corp. v. Indian Mountain Metro. Dist.,
2016 COA 118M, ¶ 31.
7
accepted, is accepted in satisfaction; and it
must be such that the party to whom it is
offered is bound to understand therefrom that
if he takes it, he takes it subject to such
conditions.
Id. (quoting Hudson v. Am. Founders Life Ins. Co., 151 Colo. 54, 63-
64, 377 P.2d 391, 396 (1962)); see Anderson v. Rosebrook, 737 P.2d
417, 419-20 (Colo. 1987) (same).
¶ 20 Under section 4-3-311(a) and (b), C.R.S. 2020, of the Colorado
Uniform Commercial Code (CUCC), subject to exceptions not
applicable here, a claim is discharged so long as (1) the person
against whom the claim is asserted in good faith tendered an
instrument to the claimant in full satisfaction of the claim; (2) the
amount of the claim was unliquidated or subject to a bona fide
dispute; (3) the claimant obtained payment of the instrument; and
(4) the instrument or an accompanying written communication
contained a conspicuous statement to the effect that the instrument
was tendered as full satisfaction of the claim.
¶ 21 The burden is on the debtor to prove that an accord and
satisfaction was reached. See § 4-3-311 cmt. 4 (“The person
seeking the accord and satisfaction must prove that the
8
requirements of [the statute] are met.”); McMahon Food Corp. v.
Burger Dairy Co., 103 F.3d 1307, 1313 (7th Cir. 1996) (same).
¶ 22 The trial court rejected Nelson’s accord and satisfaction
defense based on its conclusion that Nelson did not satisfy the first
(“good faith”) element of the defense.
¶ 23 For CUCC purposes, “‘[g]ood faith’ means honesty in fact and
the observance of reasonable commercial standards of fair dealing.”
§ 4-3-103(4), C.R.S. 2020. Official comment 4 to section 4-3-311
states, in relevant part,
[an] example of lack of good faith is found in
the practice of some business debtors in
routinely printing full satisfaction language on
their check stocks so that all or a large part of
the debts of the debtor are paid by checks
bearing the full satisfaction language, whether
or not there is any dispute with the creditor.
Under such a practice the claimant cannot be
sure whether a tender in full satisfaction is or
is not being made. Use of a check on which
full satisfaction language was affixed routinely
pursuant to such a business practice may
prevent an accord and satisfaction on the
ground that the check was not tendered in
good faith . . . .
(Emphasis added.)
¶ 24 Relying on this comment, the trial court found that Nelson had
not acted in good faith because (1) he had put “HOA Account —
9
Payment in Full” on “every check, regardless of the existence of a
dispute over the outstanding balance of his HOA account”; and (2)
one of these checks was dated August 26, 2016, prior to Nelson’s
knowledge of his delinquent balance as of September 2016:
Mr. Nelson was still in the process of verifying
the origin of the 2016 special assessment while
sending payments by check to Briargate. . . .
Nelson’s routine of writing full satisfaction
language on checks to Briargate[,] and
Briargate’s advising Mr. Nelson of the
outstanding balance on his account, leads the
Court to find that Mr. Nelson’s restrictive
endorsement checks were not a good faith
effort to establish an accord and satisfaction.
¶ 25 Nelson asserts the trial court erred in concluding that he did
not act in good faith. Specifically, Nelson points out that he did not
“pre-print” the full satisfaction language on his checks in the same
fashion as the “business debtors” in the example given in official
comment 4. Consequently, Nelson insists, the trial court’s reliance
on official comment 4 was misplaced.
¶ 26 There is no published Colorado authority discussing or
applying either the definition of “good faith” in section 4-3-103(a)(4)
or the “good faith” element of section 4-3-311. “When a Colorado
statute is patterned after a model code, as the Colorado statute is
10
on the UCC, we may draw upon available persuasive authority in
reaching our decision.” Georg v. Metro Fixtures Contractors, Inc.,
178 P.3d 1209, 1212 (Colo. 2008).
¶ 27 In Lupia v. Medicredit, Inc., 445 F. Supp. 3d 1271 (D. Colo.
2020), the federal district court for the District of Colorado applied
section 4-3-103(a)(4), section 4-3-311, and comment 4 to section 4-
3-311.
¶ 28 In Lupia, a patient was charged approximately $21,893 for
medical services at a hospital; her insurance company sent a check
to the hospital for approximately $7,154 containing full satisfaction
language printed on its back; and she received a copy of the
payment from the insurance company along with an explanation of
benefits stating “Member Responsibility: $0.00.” 445 F. Supp. 3d at
1277-78. “Believing she owed nothing further, [the patient] refused
to pay” a bill sent to her from the hospital for the remaining balance
of the charge. Id.
¶ 29 Relying on comment 4 to section 4-3-311, the federal district
court concluded that the patient “failed to establish that [her
insurer’s] partial payment constituted an accord and satisfaction”:
11
Although it is not clear that the inclusion of
accord and satisfaction language on its checks
was [the insurer’s] standard business practice,
the language plainly appears to be pre-printed
on the check, suggesting such may be the
case. Therefore, it is some evidence of a lack
of good faith. However, [the patient], whose
burden of proof it is to show good faith, offers
nothing to countermand this suggestion. She
does not show, for instance, that [the insurer]
included this endorsement only on checks
where it had a bona fide dispute about the
amount of payment, or indeed offer any
evidence suggesting how [the insurer]
concluded that the submitted charges were not
fully compensable. That [the patient] at the
time of her admission to [the hospital] signed
an agreement wherein she “acknowledge[d] full
financial responsibility for, and agree[d] to pay,
all charges . . . not otherwise paid by my
health insurance” also weighs against a finding
of good faith, which [the patient] has not
rebutted with any competent evidence.
Lupia, 445 F. Supp. 3d at 1285.
¶ 30 The court’s analysis in Lupia is instructive. Unlike in Lupia,
there is no suggestion that Nelson’s handwritten “payment in full”
language on the checks to Briargate reflected an across-the-board
business practice on his part. But it does appear to have been his
standard practice vis-a-vis Briargate — and, perhaps more
importantly — without disputing any particular debt.
12
¶ 31 In its order, the trial court referenced Nelson sending a check
with accord and satisfaction language on it to Briargate before he
had any notice of the special assessment for the roof. The record
goes further than that, however: Nelson himself testified that he’d
been handwriting restrictive endorsements on his checks to
Briargate for months before he wrote the check upon which the
court relied.
¶ 32 Further, as in Lupia, Nelson presented no evidence that the
special assessment for the insurance deductible for the roof — or
any other special assessment, for that matter — was either
illegitimate or excessive. Nelson’s only challenge to the legitimacy of
the roof assessment was that a dollar amount was not mentioned in
the initial letter notifying him of it. Ultimately, in September 2016
when he found out the amount, he did not challenge it, other than
to say he didn’t owe it because he had in law reached an accord and
satisfaction with Briargate.4
4 To the extent that Nelson argues Briargate’s underlying basis for
the assessment was somehow unsatisfactory, Nelson does not
assert that he voiced his objection to Briargate’s decision to repair
the roof. Nelson’s argument is not properly before us, then.
13
¶ 33 In a similar fashion, Nelson’s submission of “payment in full”
checks every month in the same amount,5 despite accruing late
charges, interest, and fees on the unpaid special assessment for the
roof, was indicative of a lack of good faith.
¶ 34 Under these circumstances, we cannot fault the trial court for
concluding that Nelson had not carried his burden of establishing a
proper accord and satisfaction. Consequently, he is not entitled to
reversal on this ground.
III. Checks Tendered by, but Returned to, Nelson
¶ 35 Nelson contends the trial court erred by holding that Briargate
was entitled to sue and recover damages for payments it received,
but refused to accept, in October and November 2018. More
specifically, he asserts that (1) Briargate wrongfully rejected these
payments and (2) at the very least his obligations to Briargate were
suspended during the time his checks were “taken” by Briargate.
We disagree with the first assertion but agree with the second.
5 The amount encompassed only his base, monthly HOA dues.
14
A. Briargate’s Rejection of the Checks
¶ 36 Nelson had noted on one check, and in a letter accompanying
the other check, that the payments encompassed by the checks
were to be used for a regular and a special assessment. But, as
Briargate noted, Nelson’s directives were contrary to the manner in
which late payments were to be allocated by Briargate under the
February 2015 Resolution.
¶ 37 “If a debtor directs the application of a payment, the duty is
thereby imposed on the creditor, regardless of whether he does or
does not agree or consent to the debtor’s request, to apply the
money as directed, or return it to the debtor . . . .” Mumm v. Taylor,
121 Colo. 157, 163, 213 P.2d 836, 840 (1950) (emphasis added).
¶ 38 Briargate was under no duty to accept the checks.
B. Suspension of the Obligation
¶ 39 Under section 4-3-310(b), C.R.S. 2020, “[u]nless otherwise
agreed . . . if a note or an uncertified check is taken for an
obligation, the obligation is suspended to the same extent the
obligation would be discharged if an amount of money equal to the
amount of the instrument were taken . . . .” And, “[i]n the case of
15
an uncertified check, suspension of the obligation continues until
dishonor of the check or until it is paid or certified.” Id.¶ 40 The two checks at issue here are the uncertified ones Nelson
sent Briargate in October 2018 and November 2018 — for $937.34
and $8,607.44, respectively — and that Briargate returned to him,
uncashed.
¶ 41 Nelson asserts that his delivery of the checks, and Briargate’s
retention of them before returning them, constituted a “taking” of
the checks for purposes of section 4-3-310(b). Briargate, however,
insists that since it did not cash the checks and returned them to
Nelson, Briargate never “took” the checks under the statute.
¶ 42 In Fifth Third Bank v. Jones, 168 P.3d 1 (Colo. App. 2007), a
debtor sent a certified check to pay a debt at the bank. A bank
representative “noted receipt of the check in the bank records and
forwarded it to the payoff department.” Id. at 2. A week later, the
parties learned that the check had been lost, and the bank decided
that the debtor had not satisfied his obligation.
¶ 43 Section 4-3-310(a) provides that
[u]nless otherwise agreed, if a certified
check . . . is taken for an obligation, the
obligation is discharged to the same extent
16
discharge would result if an amount of money
equal to the amount of the instrument were
taken in payment of the obligation.
¶ 44 The division in Fifth Third Bank was tasked with considering
whether the bank had “taken” the check while internal procedures
at the bank were pending. Noting comment 2 to the statute, the
division concluded that “the taking for an obligation occurs
simultaneously with the giving of the payment.” Fifth Third Bank,
168 P.3d at 2; see § 4-3-310(a) cmt. 2 (the check “is given in
payment of an obligation”). Therefore, the bank had “taken” the
check.
¶ 45 The division in Fifth Third Bank addressed the meaning of the
word “taken” in the context of section 4-3-310(a) dealing with
certified checks. Here, we consider the meaning of that term as
used in 4-3-310(b) dealing with uncertified checks. No matter. The
concept remains the same regardless of the type of check.
¶ 46 In Scalise v. American Employers Insurance Co., 789 A.2d
1066, 1070 (Conn. App. Ct. 2002), the appellate court recognized
that “the delivery of a note or an uncertified check suspends an
obligation to pay” until dishonor of the note or check or until either
is paid. (Emphasis added.) “A check is . . . often referred to as
17
conditional payment, the condition being its collectability from the
bank on which it is drawn.” Id. at 1071 (citation omitted). Because
the date of payment would then “relate back” to the day the creditor
“took” payment from the debtor, it is logical that, until the check is
cashed, the debtor’s obligation is suspended.
¶ 47 The trial court in Scalise provided a well-reasoned example of
why the timing for a “taken” check is important:
Suppose an individual pays a telephone bill by
check on April 1 but the telephone company
does not deposit the check until 30 days later.
To hold that the obligation is discharged upon
the check clearing would allow the telephone
company to argue that the bill was paid late
and charge the individual a late fee. The
telephone company would benefit from its own
delay by penalizing the individual for the late
deposit. If the check did not clear, however,
then the telephone company would have a
cause of action against the individual.
Scalise v. Am. Emps. Ins. Co., No. CV 970158687S, 2000 WL
765121, at *3 n.8 (Conn. Super. Ct. May 25, 2000) (unpublished
opinion), aff’d, 789 A.2d 1066.
¶ 48 Here, it is undisputed that Briargate returned the checks to
Nelson. The effect of the statute, then, “does no more than
recognize the uncertainty attendant upon an uncertified and unpaid
18
check and suspends the obligation until that uncertainty is
resolved.” France v. Ford Motor Credit Co., 913 S.W.2d 770, 772
(Ark. 1996). It follows that during the time Briargate had
possession of (that is, had “taken”) the checks before returning
them to Nelson, the account was “uncertain,” and thus had been
suspended. The suspension ended when Briargate returned the
checks.
¶ 49 The consequence of all this is not that Nelson’s obligations
were suspended until the outcome of the trial; they were suspended
to the extent of the amounts on the checks, and only for the time it
took for Briargate to return the checks. It appears to us that the
court erroneously included in the judgment late fees, interest, and
penalties for the apparently short times Nelson’s obligations were
suspended.6 Consequently, the judgment will have to be
recalculated. Because we are not capable of making the findings of
6 Briargate purported to have returned the October 2, 2018, check
by a letter dated October 15, 2018. Briargate purported to have
returned the November 5, 2018, check by a letter dated December
11, 2018.
19
fact necessary to make these determinations, a remand to the trial
court for this purpose is required.
IV. Equitable Offset
¶ 50 We reject Nelson’s contention that the trial court erred by not
offsetting what he owed Briargate against what it owed him from
prior judgments.
¶ 51 “A ‘setoff’ is ‘a debtor’s right to reduce the amount of a debt by
any sum the creditor owes the debtor; the counterbalancing sum
owed by the creditor.’” Rivera v. Am. Fam. Ins. Grp., 2012 COA 175,
¶ 16 (quoting Black’s Law Dictionary 1496 (9th ed. 2009)); see In re
Adamic, 291 B.R. 175, 181 (Bankr. D. Colo. 2003) (“The right of
setoff (also called ‘offset’) allows entities that owe each other money
to apply their mutual debts against each other, thereby avoiding
‘the absurdity of making A pay B when B owes A.’” (quoting Citizens
Bank of Md. v. Strumpf, 516 U.S. 16, 18 (1995))).
¶ 52 The right of setoff is a common law right. United States v.
Munsey Tr. Co. of Wash., D.C., 332 U.S. 234, 239 (1947); see In re
Balducci Oil Co., 33 B.R. 847, 850-51 (Bankr. D. Colo. 1983)
(“In Colorado, the doctrine of setoff has long been recognized.”);
Marso v. Homeowners Realty, Inc., 2018 COA 15M, ¶¶ 23-46
20
(recognizing “common law setoff rules”). As such, the right can be
prohibited, waived, or relinquished by statute, regulation, or
agreement. See Kailey v. Chambers, 261 P.3d 792, 798 (Colo. App.
2011) (noting that the General Assembly may change common law
through legislation “manifest[ing] its intent expressly or by clear
implication”); James Constr. Grp., LLC v. Westlake Chem. Corp., 594
S.W.3d 722, 764 (Tex. App. 2019) (“Parties can waive common law
rights by agreement, and we respect their freedom of contract to do
so.”) (footnote omitted); cf. Ensley, Inc. v. United States, 114 Fed. Cl.
704, 714 (2014) (“[T]he government’s common law setoff rights can
be defeated or constricted only by ‘explicit contractual, statutory, or
regulatory language.’” (quoting J.G.B. Enters., Inc. v. United States,
497 F.3d 1259, 1261 (Fed. Cir. 2007))).
¶ 53 Here, the trial court ruled that Nelson “was contractually
barred from offsetting his obligation to pay assessments for any
reason.”7
7 Nelson asserts that the trial court also decided that the doctrine of
equitable offset is “limited to bankruptcy cases.” The court did not,
though, decide that. The court simply found inapplicable the
bankruptcy cases upon which Nelson relied.
21
¶ 54 “HOA by-laws and Declaration[s] are contracts.” Keller v. Kay,
96 N.Y.S.3d 605, 607-08 (App. Div. 2019); see Swan Creek Vill.
Homeowners Ass’n v. Warne, 2006 UT 22, ¶ 50, 134 P.3d 1122,
1132 (“[T]he Declaration constitutes a contract between the HOA
and its members and . . . a recorded Declaration imparts notice of
its contractual terms to all who acquire property subject to it.”); cf.
Park Place Ests. Homeowners Ass’n v. Naber, 35 Cal. Rptr. 2d 51,
53-54 (Ct. App. 1994) (holding setoffs to HOAs are barred as against
public policy); Trs. of Prince Condo. Tr. v. Prosser, 592 N.E.2d 1301,
1302 (Mass. 1992) (barring setoff to the equivalent of an HOA as
contrary to public policy).
¶ 55 Here, article 11, section 11.1 of the Declaration governing the
HOA provides that “[a]ll assessments shall be payable in accordance
with the levy thereof and in accordance with the provisions of this
Declaration, and no offsets or deductions thereof shall be permitted
for any reason . . . .” (Emphasis added.)
¶ 56 This provision supports the trial court’s ruling. But Nelson
asserts that because the Declaration upon which the HOA relied
was recorded on November 2, 2017, it could not bar his right to
offset debts prior to that date.
22
¶ 57 Even assuming Nelson was correct in his assertion, it would
do him no good. That is because any common law right to offset
damages is, in our view, barred by the public policy of the Colorado
Common Interest Ownership Act (CCIOA), sections 38-33.3-101
to -402, C.R.S. 2020.
¶ 58 Pursuant to section 38-33.3-315(6), C.R.S. 2020, “[e]ach unit
owner is liable for assessments made against such owner’s unit
during the period of ownership of such unit.” This is so because “it
is in the best interests of the state and its citizens to establish a
clear, comprehensive, and uniform framework for the creation and
operation of” condominiums. § 38-33.3-102(1)(a), C.R.S. 2020.
Thus, “the economic prosperity of Colorado is dependent upon”
financially strengthening homeowners’ associations in part “by
increasing the association’s powers to collect delinquent
assessments, late charges, fines, and enforcement costs.” § 38-
33.3-102(1)(b).
¶ 59 “Permitting a unit owner’s duty to pay assessments to be
nullified [by a claim of offset] would . . . threaten the financial
stability of condominium associations throughout this state.”
23
Spanish Ct. Two Condo. Ass’n v. Carlson, 2014 IL 115342, ¶ 31, 12
N.E.3d 1, 9.
Whatever grievance a unit owner may have
against the condominium trustees must not be
permitted to affect the collection of lawfully
assessed common area expense charges. A
system that would tolerate a unit owner’s
refusal to pay an assessment because the unit
owner asserts a grievance, even a seemingly
meritorious one, would threaten the financial
integrity of the entire condominium
operation. For the same reason that taxpayers
may not lawfully decline to pay lawfully
assessed taxes because of some grievance or
claim against the taxing governmental unit, a
condominium unit owner may not decline to
pay lawful assessments.
Prosser, 592 N.E.2d at 1302 (“[T]here is no right to a set-off against
a lawfully imposed condominium charge.”); see also, e.g., Naber, 35
Cal. Rptr. 2d at 53 n.5 (same); Mountain View Condo. Ass’n of
Vernon, Conn., Inc. v. Rumford Assocs., IV, No. CV 9455693S, 1997
WL 120254, at *1-7 (Conn. Super. Ct. Mar. 4, 1997) (unpublished
opinion) (same); Park Ctr. Condo. Council v. Epps, No. 95C-05-033-
WTQ, 1997 WL 817875, at *2-4 (Del. Super. Ct. May 16, 1997)
(unpublished opinion) (same); Pooser v. Lovett Square Townhomes
Owners’ Ass’n, 702 S.W.2d 226, 231 (Tex. App. 1985) (same).
24
¶ 60 We are persuaded by these authorities and, consequently,
conclude that the trial court did not err by denying Nelson’s defense
of setoff.
V. Double Recovery
¶ 61 Nelson next contends the trial court erred by admitting
evidence of a December 2018 check for impeachment purposes
only. According to him, it should have also been admitted as
substantive evidence that he had paid down his account. We
conclude that reversal is not warranted.
¶ 62 At trial, Nelson testified that he consistently dated and mailed
his checks on the same day to prove certain checks were not late.
However, Briargate’s counsel presented a $485.84 check written by
Nelson dated December 6, 2018, which, according to the envelope,
wasn’t postmarked until sometime in late December 2018.8 The
trial court admitted the check and the envelope into evidence over
Nelson’s objection for “impeachment purposes.”
¶ 63 Briargate’s ledger indicated that Briargate had deposited the
December 2018 check on January 7, 2019, and applied it as a
8The exact date was illegible but the parties agreed it was “well
after December 6, [2018].”
25
“legal payment.” However, the trial court had excluded a portion of
Briargate’s ledger reflecting Nelson’s account, stating it “will not
consider any entries after December 1, 2018,” for “either side.”
Consequently, the trial court calculated Briargate’s damages
between June 1, 2016, and December 1, 2018.
¶ 64 The effect of the court’s orders, Nelson asserts, was to allow
Briargate a double recovery on his $485.84 check: once when
Briargate cashed his check, and a second time, as part of the
judgment owed by Nelson to Briargate.
¶ 65 Significantly, at no time during trial did Nelson argue that the
trial court’s rulings gave Briargate a right of double recovery: not
when the check was admitted for impeachment purposes only; not
when the court announced it would not consider ledger entries after
December 1, 2018, for calculating damages; and not in written
arguments, either. The first time Nelson raised it was after trial, in
his C.R.C.P. 59 motion for post-trial relief.
¶ 66 Objections to trial court rulings must be made
contemporaneously with the court’s actions before appellate review
is afforded. See Suydam v. LFI Fort Pierce, Inc., 2020 COA 144M,
¶ 80. Arguments made, as here, for the first time in a post-trial
26
motion are too late and, consequently, are deemed waived for
purposes of appeal. See Affiniti Colo., LLC v. Kissinger & Fellman,
P.C., 2019 COA 147, ¶ 47 (collecting post-trial motion for
reconsideration cases); Fid. Nat’l Title Co. v. First Am. Title Ins. Co.,
2013 COA 80, ¶ 51 (defense first raised in post-trial motion wasn’t
preserved for appeal); see also People v. Schaufele, 2014 CO 43,
¶ 49 (Boatright, J., concurring in the judgment) (“Motions for
reconsideration are designed to correct erroneous court rulings;
they are not designed to allow parties to present new legal
arguments for the first time and then appeal their denial . . . .”).
¶ 67 Consequently, reversal is not warranted on this ground.
VI. Attorney Fees and Costs
¶ 68 Nelson appeals the trial court’s award of costs and attorney
fees. And both parties request awards of costs and attorney fees
incurred on appeal. We conclude that Briargate alone is entitled to
fees and costs.
¶ 69 Section 38-33.3-123(1)(c), C.R.S. 2020, provides: “In any civil
action to enforce or defend the provisions of this article or of the
declaration, bylaws, articles, or rules and regulations, the court
27
shall award reasonable attorney fees, costs, and costs of collection
to the prevailing party.”
¶ 70 We have concluded that, apart from a relatively minor issue
regarding the amount of damages, the trial court properly entered
judgment for Briargate. Consequently, Briargate was entitled in the
trial court to an award of attorney fees as the prevailing party.
Briargate is also entitled to attorney fees and costs for successfully
defending its judgment on appeal. Nelson is not entitled to his fees
and costs on appeal.
VII. Disposition
¶ 71 The judgment is affirmed in part, reverse in part, the order is
affirmed, and the matter is remanded to the trial court with
directions to (1) determine the extent to which the judgment
includes fees or interest assessed during the short time Briargate
retained Nelson’s October and December 2018 checks before
returning them; (2) reduce Briargate’s judgment in that amount;
and (3) award Briargate its reasonable attorney fees and costs
incurred on appeal.
JUDGE FREYRE and JUDGE YUN concur.
28