The Ventana Owners Association, Inc. v. Ventana KC, LLC , 2015 Mo. App. LEXIS 1310 ( 2015 )

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(Eastern Esteem
DIVISION TWO
THE VENTANA OWNERS ) ED102290
ASSOCIATION, INC., )
) Appeal from the Circuit Court
Appellant, ) of the City of St. Louis
) l322—CC09408
v. )
) Honorable David L. Dowd
VENTANA KC, LLC, )
)
Respondent. ) Filed: December 15, 2015
Introduction
The Ventana Owners Association, Inc. (Association) appeals the summary
judgment of the trial court in favor of Ventana KC, LLC (VKC) 011 the Association’s
foreclosure action to enforce liens for outstanding assessments. Because the
Association’s bylaws, upon which the triai court relied in granting summary judgment to
VKC, conflict with the Missouri Uniform Condominium Act (Act), the Act controls and
we must reverse.
mm
The Association is the condominium owncrs’ association for The Ventana, a
condominium located at 1641 Washington Avenue in St. Louis. The Association is
governed by its Declaration of Condominium (Declaration), recorded on January 17,
2007, and by the Bylaws of The Ventana Owners Association, Inc. (Bylaws).
On May 14, 2013, VKC acquired title to 55 units of The Ventana through
foreclosure. The deed upon which VKC foreclosed had been recorded in July of 2009,
and by its terms was a “construction mortgage.”
In September of 2013, the Association initiated the current foreclosure action,
alleging that the Association had a statutory lien on the 55 units due to delinquent
assessments in the amount of $22,879.50. These outstanding assessments corresponded
to an approximately six-week time period immediately preceding the transfer of title to
VKC through foreclosure
VKC moved for summary judgment, arguing that the Association’s Bylaws
precluded enforcement of the assessment liens against VKC, because VKC had paid all
assessments due after it took title to the 55 units. Specifically, the Bylaws contain the
foilowing provision:
9.6 Lien after Foreclosure. When Ownership of a Unit is
transferred by foreclosure, . . . any unpaid assessments as to the
Unit shall continue to accrue . The Unit and Owner
acquiring title . . . shall be subject only to the lien of
assessments which become due after such transfer of title.
The trial court agreed and granted VKC’s motion for summary judgment. The trial court
also issued a separate order awarding attorneys’ fees to VKC under provisions in the
Association’s Declaration and Bylaws allowing for attorneys’ fees to the prevailing party.
This appeal follows.
occur, and thus, we remand this issue for the trial court to determine, along with the
appropriate award of attorneys’ fees in the trial court, any award of appellate attorneys’
fees to the Association it should conclude are reasonable.4
W
The trial court erred in determining that the Association’s assessment lien was not
enforceable against VKC. We reverse the trial court’s summary judgment and vacate its
separate award of attorneys’ fees to VKC. We remand to the trial court for proceedings
consistent with this Opinion.
REVERSED AND REMANDED.
Gary
Philip M. Hess, P. 5., concurs.
Angela T. Quigless, J ., concurs.
" VKC argues the Association’s request for fees was untimely under Local Rule 400, which requires parties
to submit requests for attorneys’ fees prior to submission of the case. However, the Association included a
request for attorneys’ fees in its appellate briefs, and moreover, Section 4483-1167r mandates an award of
attorneys’ fees in any action to recover lost assessments. Because we remand to the trial court for
determination of the amount of reasonable attorneys’ fees at both the trial and appellate levels, we do not
find that the Association’s late filing of its itemized billing statement precludes its ability to recover fees in
this case, given the mandate of Section 448.3-1163’.
ll
Standard of Review
Our review of a trial court’s summary judgment is essentially de novo. 11:1:
Commercial Fin. C0132. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo.
banc 1993). We review the record in the light most favorable to the non-moving party,
according the non-movant the benefit of all reasonable inferences from the record. I_d.
The propriety of summary judgment is purely an issue of law, and therefore we need not
defer to the trial court’s order granting summary judgment. E
Discussion
The Association raises four points on appeal. Points I and II are related and are
dispositive. The Association argues that while the Bylaws would have precluded
recovery against VKC, that provision conflicts with the Act, and the Act controls. The
Association further argues that the controlling provisions of the Act may not be varied.
Thus, the Association argues that the trial court erred in granting summary judgment in
favor of VKC. We agree.
Section 448.3-116, RSMo. (2000)l contains the following provision:
1. The association has a lien on a unit for any
assessment levied against that unit or fmes
imposed against its unit owner from the time the
assessment or fine becomes due. The
association’s lien may be foreclosed in like
manner as a mortgage on real estate . . . .
Subsection 2 continues, “A lien pursuant to this section is prior to all other liens and
encumbrances on a unit.” This super-priority status exists for assessment liens because
an association’s assessments contribute to the maintenance of the common elements and
the value of the entire condominium. Bd. of Managers of Parkway Towers Condo.
1 The legislature amended this statute in 2014, but the previous version applies to the present Suit. We cite
the previous version throughout this opinion.
due prior to any subsequent refinancing of a unit 01' for any
subsequent second mortgage interest.
In contrast, under Section 9.6 of the Association’s Bylaws, an owner acquiring
title to a unit by foreclosure “shall be subject only to the lien of assessments which
become due after such transfer of title.” The Association argues this creates a
discrepancy between the Bylaws and the statute. Essentially, the Bylaws create an
additional exception to the priority status of an association’s lien: where a transfer of title
occurs due to foreclosure. Moreover, here, the Bylaws in effect would extinguish the
statutory lien the Association otherwise would have had on the 55 units, because under
the Bylaws, foreclosure is no longer a remedy to collect these particular delinquent
assessments. We agree.
Section 448.1-110 states that the statutes constituting the Act “shall be applied
Ass’n, Inc. V. Carcopa, 403 S.W.3d 590, 592 (Mo. banc 2013). There are four exceptions
to the priority status of assessment liens in Section 4483-1162:
( 1) Liens and encumbrances recorded before the recordation of
the declaration;
(2) A mortgage and deed of trust for the purchase of a unit
recorded before the date on which the assessment sought to
be enforced became delinquent;
(3) Liens for real estate taxes and other governmental
assessments or charges against the unit; [and]
(4) Except for delinquent assessments or fines, up to a
maximum of six months’ assessments or fines, which are
i
and construed so as to effectuate their general purpose to make uniform the iaw[.]”
Section 448.2-103 provides the following:
1. All provisions of the declaration and bylaws are severable.
3. In the event of a conflict between the provisions of the
declaration and the bylaws, the declaration prevails except
to the extent the declaration is inconsistent with sections
448.1—101 to 448.4—120.
Both parties acknowledge this statute and agree that in the event of a conflict between an
association’s bylaws and the statute, the statute controls. However, they disagree as to
whether such a conflict is present here.
In this case, the relevant portions of the Declaration do not conflict with Section
448.3-116. In fact, the Declaration’s language regarding assessment liens is substantially
the same as Section 448.3-116, containing three of the same statutory exceptions to the
priority status of assessment liens.2 However, by creating an additional exception in the
case of foreclosure, which under those circumstances effectively extinguishes the
assessment lien provided for in both the statute and the Declaration, the Bylaws are in
direct conflict with both.
VKC maintains that there is no conflict because the Declaration and Bylaws
uphold the statutory priority status of lien assessments and merely restrict the manner of
collection upon those liens, which is permissible. fl Eagen v. Mueller, 809 S.W.2d
411, 413 (Mo. App. W.D. 1991) (noting “association may exercise its powers only within
the constraints of its condominium declaration and bylaws”; holding that because
association did not follow declaration’s process for estimating and collecting common
2 Specifically, the Declaration includes the following language in Section 7.08:
(a) All assessments of any kind not paid by an Owner when due . . . shall constitute a lien on such
Unit superior and prior to all other liens and encumbrances, except:
(1) Liens and encumbrances recorded before the recordation of this Declaration, including any
Mortgagee’s Deed of Trust and Security Agreement and Assignment of Leases and Rents;
(2) All liens under any mortgage or deed of trust for the purchase of a Unit recorded prior to the
date such assessment becomes delinquent; and
(3) Liens for real estate taxes and other governmental assessments or charges against the Unit.
Though the Declaration fails to include the fourth statutory exception, it is not at issue here, thus, as
relevant here, we conclude the Declaration does not conflict with Section 4483-116.
5
expenses, it was not entitled to judgment for lump sum reimbursement); Surry Condo.
Ass’n Inc. v. Webb, 163 S.W.3d 531, 537 (Mo. App. SD. 2005) (noting association
“may exercise its authority to levy and collect assessments only in the manner provided
in the Declaration”). We disagree.
The Declaration addresses assessments in Section 7.08. Subsection (a) states that
delinquent assessments “shall constitute a lien on such Unit superior and prior to all other
liens and encumbrances.” Subsection (b) states that “Much lien . . . may be enforced by
foreclosure . . . .” Finally, subsection (c) creates an alternative means of collection, not
based on a lien but on a contractual debt:
The amount of each assessment shall also be a personal debt of
each respective Owner . . . . The Association may maintain an
action against each Owner to recover a money judgment for
unpaid assessments without foreclosing or waiving the lien
securing the same . . . .
Thus, both the statute and the Declaration maintain that an assessment lien has priority,
and the Declaration creates an additional means of collection, stating that the assessment
lien remains intact even when the Association pursues the alternative means of collection
through a personal action for money judgment. Therefore, any owner taking title to units
encumbered by an assessment lien should be on notice under the statute as well as the
Declaration that the lien will be prior to the new owner’s interest in the property unless a
statutory exception applies.
However, Section 9.6 of the Bylaws purports to remove this encumbrance in the
case of foreclosure. It provides that an owner acquiring title through foreclosure “shall
be subject only to the lien of assessments which become due after such transfer of title.”
Contrary to VKC’s argument that this section upholds the lien priority, it in effect
extinguishes the lien where there has been a foreclosure. The only remedy preserved by
Section 9.6 in such a case is the Association’s ability to pursue a money judgment against
the former owner: “Nothing in this paragraph shall be construed as a waiver or release of
the obligation of the former Owner to pay the delinquent assessments.”
A personal debt of an owner for unpaid assessments, collected by an action for a
money judgment, is not enforcement of a lien but an entirely different legal action and
distinct remedy; whereas a lien attaches to the property, not the owner. & Carcopa, 403
S.W.3d at 593 (noting Section 448.3-116 provides lien on individual unit). The '
contractual personal debt for unpaid assessments created by the Declaration is
enforceable only against the owner who did not pay assessments. Under Section 9.6 of
the Bylaws, therefore, only the personal debt created by the Declaration is actionable in
the case of foreclosure, and no lien remains in such a case because the Association no
longer has the right to pursue foreclosure of the unit. Thus, the Bylaws essentially
remove the encumbrance of the assessment liens from foreclosed property. Contrary to
establishing simply a method of pursuing a statutory right, to which an association must
adhere under m and m, this section of the Bylaws purports to extinguish that
right, leaving only the contractual right to collect on the personal debt for unpaid
assessments contained in the Declaration.
This directly conflicts with the statute. While VKC argues the statute is silent
regarding assessment liens in the event of foreclosure, the statute’s silence on this issue is
precisely what confirms the priority of assessment liens in such a situation. Section
448.3-116 contains only four exceptions to the priority status of an association’s
assessment liens, and foreclosure is not one of them. See River Oaks Condo. Ass’n v.
Donovan, 2013 WL 4666343 at *7-8 (ED. Mo. Aug. 30, 2013) (foreclosure did not
extinguish assessment lien under Section 4483—116). Thus, the association’s lien
maintains its priority status, and unless another exception applies, an owner who takes
encumbered units through foreclosure takes them with the risk that the association will
seek to enforce those liens as provided for in Section 448.3-116.
In light of this conflict, the Declaration, and ultimately Section 448.3-116,
prevails. Section 4482-103; Carroll v. Oak Hall Assocs. L.P., 898 S.W.2d 603, 606
(Mo. App. W.D. 1995). This is because the Bylaws cannot “add or subtract from the
statutory lien provision” of Section 448.3-116. & ML], 898 S.W.2d at 606 (common
expenses lien draws efficacy from statute, not bylaw). Furthermore, “{v]ariations in the
Act’s requirements are generally allowed only where expressly provided.” Q at 607
(citing Section 448.1-104). No express provision for variation exists in Section 448.3-
116.
Thus, the Bylaws provision here, purporting to extinguish the Association’s
statutory lien for outstanding assessments and corresponding right to foreclose regarding
these particular delinquent assessments, must be severed. While we sympathize with
VKC’S position that they took title to the 55 units in part relying on the Bylaws’
provision that the Association would not be able to enforce any assessment lien on those
units, the Act exists to protect condominium associations and create uniform expectations
for buyers and lenders. “Public policy requires that condominium associations have
sufficient power to enforce the collection of assessments; otherwise the association will
not be able to continue to function and meet its obligations without unfairly burdenng the
other members of the community.” Carcopa, 403 S.W.3d at 593. We must uphold the
statutory provisions regardless of what the drafters of the Bylaws sought to change, even
if in this case the statute works to protect those drafters from their own Bylaws. Thus,
the trial court erred in granting summary judgment in favor of VKC on the basis of the
Bylaws.
However, the question remains whether the priority status of the Association’s
assessment lien was subject to any of the exceptions contained in Section 4483-1162. If
an exception applied, the trial court’s summary judgment would still have been proper.
S_ec_ Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d 112, 120 (Mo. banc
2010) (appellate court may affirm summary judgment under any theory suppofied by
record).
First, the Declaration was recorded in January of 2007. The deed of trust, secured
by the 55 units, which VKC foreclosed upon, was recorded in July of 2009. Thus, the
first exceptionmfor liens and encumbrances recorded before the declaration%oes not
apply. Section 4483-1162(1).
Second, Section 4483-1162(2) contains an exception for a mortgage and deed of
trust for the purchase of a unit recorded before the assessments became delinquent. The
2009 deed of trust, upon which VKC foreclosed, stated that it was a “construction
mortgage” and contained no reference to “purchase money.” A construction mortgage is
not the same as a purchase-money mortgage. See, gg, Altom Constr. Co. v. BB
Syndication Servs., Inc., 359 S.W.3d 146, 149—50 (Mo. App. SD. 2012). Therefore,
though the deed of trust was recorded before the assessments became delinquent, it was
not a deed of trust for the purchase of a unit and cannot fall under Section 4483-1162(2).
mmmmmrmwm ._ . M..." ...._
Finally, subsections (3) and (4) do not apply here because there are no
governmental liens or refinancing involved. Thus, the priority status of the Association’s
assessment lien remains intact. Points 1 and II granted.
The Association’s third point contests the trial court’s award of attorneys’ fees in
favor of VKC. Because we reverse the trial court’s summary judgment in favor of VKC,
we also must vacate its award of attorneys’ fees to VKC as the prevailing party. Point
granted.3
Attorneys’ Fees on Appeal
VKC requested reasonable attorneys’ fees on appeal under the Declaration,
Bylaws, and Section 4483-1167. Because it is not a prevailing party, VKC’S motion is
denied.
The Association also requested attorneys’ fees, under Section 4483-1167. This
section provides the following:
The association shall be entitled to recover any costs and
reasonable attorneys’ fees incurred in connection with the
collection of delinquent assessments. A judgment or decree in
any action brought pursuant to this section shall include costs
and reasonable attorney[s’} fees for the prevailing party.
While courts are considered experts regarding the value of appellate services and
“appellate courts have the authority to allow and fix the amount of attorneys’ fees on
appeal, we exercise this power with caution, believing in most cases that the trial court is
better equipped to hear evidence and argument on this issue and determine the
reasonableness of the fee requested.” Rosehill Gardens Inc. v. Luttrell, 67 S.W.3d 641,
648 (Mo. App. WD. 2002). Moreover, upon remand, additional fees will undoubtedly
3 The Association argues in its final point that the trial court lacked jurisdiction to award attorneys’ fees to
VKC because VKC’s motion for attorneys’ fees was untimely. This point is denied as moot.
10