Sarita and Nafis Khan, Eric and Katherine Gadpaille, Judith LaPointe and Robert Earley v. Alpine Haven Property Owners' Association, Inc. ( 2020 )

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@vermont.gov 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.
2020 VT 90
No. 2019-184
Sarita and Nafis Khan, Eric and Katherine Gadpaille, Supreme Court
Judith LaPointe and Robert Earley
On Appeal from
v. Superior Court, Franklin Unit,
Civil Division
Alpine Haven Property Owners’ Association, Inc. December Term, 2019
Robert A. Mello, J.
Barry Kade, Montgomery, for Plaintiffs-Appellants.
Robert W. Scharf of Kohn Rath Danon Lynch & Scharf, LLP, Hinesburg, for
Defendant-Appellee.
PRESENT: Reiber, C.J., Robinson,1 Eaton and Carroll, JJ., and Morris, Supr. J. (Ret.),
Specially Assigned
¶ 1. REIBER, C.J. This is one in a series of cases involving Alpine Haven, a large
residential development in the adjoining Towns of Montgomery and Westfield, Vermont. This
appeal follows a remand in which we directed the trial court to determine the basis on which the
Alpine Haven Property Owners Association, Inc. (AHPOA) could bill plaintiffs for services that
AHPOA provides. The trial court determined that those plaintiffs who owned “Chalet Lots” were
required by their deeds to pay AHPOA a reasonable fee for road maintenance, snowplowing, and
garbage removal; those plaintiffs who owned “Large Lots” were required by statute and equitable
1
Justice Robinson was present for oral argument but did not participate in this decision.
principles to contribute to AHPOA’s road maintenance costs. The court concluded that plaintiffs
failed to show any material factual dispute regarding the reasonableness or accuracy of AHPOA’s
fees. It thus ordered plaintiffs to pay AHPOA’s annual assessments between 2011 and 2018.
Plaintiffs challenge this decision on appeal. We affirm.
¶ 2. This case began in 2011 when plaintiffs filed a declaratory judgment action to
“determine their deeded property rights” and “to determine a reasonable fee for services they
receive from [AHPOA].” AHPOA counterclaimed for its unpaid annual assessments.
¶ 3. We detailed the history of this case, the evolution of Alpine Haven, and the creation
of AHPOA in Khan v. Alpine Haven Prop. Owners’ Ass’n (Khan I), 2016 VT 101, 203 Vt. 251,
153 A.3d 1218. Essentially restated, Alpine Haven is “a sprawling subdivision located along
Vermont Route 242 in the Towns of Montgomery and Westfield.” Id. ¶ 1. It “contains more than
eighty-five lots with homes,” referred to as “Chalet Lots,” as well as “several undeveloped or
‘large lots.’ ” Id. ¶ 10. Plaintiffs own Chalet Lots and/or Large Lots. AHPOA owns and maintains
a 4.5-mile private road network within Alpine Haven. Almost all owners need these roads to
access their property. AHPOA is also responsible for the streetlights, snowplowing, and garbage
disposal within Alpine Haven.
¶ 4. In Khan I, we considered if Alpine Haven was a “preexisting common interest
community” under 27A V.S.A. § 1-204 and thus subject to the provisions of the Vermont Common
Interest Ownership Act. 2016 VT 101, ¶¶ 1, 7. We concluded that it was not and remanded for a
determination of the basis on which AHPOA could “calculate the fees for deeded services it has
provided to each of [the Chalet Lot] properties and how much of a fee, if any,” it could charge the
Large Lot owners “for their rights of way.” Id. ¶¶ 40-41 (alterations omitted) (quotation marks
omitted).
¶ 5. On remand, AHPOA moved for summary judgment and plaintiffs moved for partial
summary judgment in their favor. Following oral argument, the court granted summary judgment
2
to AHPOA. It relied on the following undisputed facts. Pursuant to the terms of plaintiffs’ Chalet
Lot deeds, AHPOA must keep and maintain the right-of-way in a good, reasonable state of repair,
supply water and garbage removal, and maintain the streetlights. Plaintiffs, in turn, must pay
AHPOA “a reasonable annual fee” for these services.2 The deeds do not make the reasonable
annual fee contingent on actual use of these services or membership in AHPOA. The court thus
found these factors immaterial to plaintiffs’ obligation to pay a reasonable fee.
¶ 6. The Large Lot deeds conveyed as an appurtenance “the right to use in common
with others, those roadways in the Alpine Haven subdivision which provide ingress and egress to
and from Vermont Route 242 to the conveyed premises.” While the deeds did not expressly
require plaintiffs to contribute to road-maintenance costs, the court found that plaintiffs were
required to do so by equitable principles and by statute. See Hubbard v. Bolieau, 144 Vt. 373,
375-76, 477 A.2d 972, 973 (1984) (recognizing longstanding equitable principle that “when
several persons enjoy a common benefit, all must contribute rateably to the discharge of the
burdens incident to the existence of the benefit” and “[t]he obligation to contribute” is designed
“to prevent unjust enrichment” and “applies in the absence of an express agreement” (quotation
omitted)); see also Kelly v. Alpstetten Ass’n, 131 Vt. 165, 168, 303 A.2d 136, 138 (1973)
(recognizing “equitable principle that requires persons in the enjoyment of a common benefit to
all contribute their proportionate share to the discharge of the burdens incidental to the existence
of the benefit” and that “[t]his principle applies in the absence of agreement, and is subject to
modification by the specific terms of a particular grant”). This equitable principle is codified at
19 V.S.A. §§ 2701, 2702 (“In the absence of an express agreement or requirement governing
maintenance of a private road, when more than one person enjoys a common benefit from a private
2
There are slight but inconsequential variations in the deed language with respect to these
mutual obligations.
3
road, each person shall contribute rateably to the cost of maintaining the private road, and shall
have the right to bring a civil action to enforce the requirement of this section.”).
¶ 7. Construing the deeds and applicable law together, the court concluded that the
Large Lot owners must pay for their use of and access to the entire Alpine Haven road network
and not just the portion of the road that they allegedly used. It reasoned that the Large Lot owners
knowingly purchased property in a private development with a network of roads; they were granted
common access to, and they benefited from, the roads. They were thus required to contribute
ratably to the maintenance of the roads.
¶ 8. The court further found that while Alpine Haven was not a legally recognized
common-interest community, it operated, as a practical matter, as one unified development for the
purpose of providing a means to access plaintiffs’ properties. Plaintiffs had the continuing right
to utilize that access at any time. This access enhanced private and commercial access to their
properties and allowed for future development possibilities. As compared to landlocked parcels,
the court found that these access rights added value and potential benefit to the Large Lots
regardless of whether plaintiffs decided to use some or all roads.
¶ 9. Finally, the court found that a “ratable” contribution as used in 19 V.S.A. § 2702
did not necessarily mean proportionate to use but instead depended on the particular circumstances
of each case. See Restatement (Third) of Prop.: Servitudes § 4.13 cmt. e (2000) (“The
responsibility of each user should reflect a fair proportion of the costs. The basis of fair
apportionment will vary depending on the circumstances.”). It concluded under the circumstances
here that plaintiffs must pay a reasonable fee for maintaining all existing roads and associated
infrastructure.
¶ 10. The court thus turned to the specific fees charged by AHPOA. Relying on
AHPOA’s statement of undisputed facts, it found that AHPOA used a three-tiered billing system:
(1) road maintenance fees only; (2) deeded services including road maintenance and street lights
4
and garbage removal; and (3) AHPOA member services, which in addition to the above, included
driveway snowplowing and basic recreational services associated with access to common-area,
pool, and tennis facilities. AHPOA’s bills also included an average 15% surcharge to cover
operating and overhead costs.3
¶ 11. AHPOA stated that maintaining the roads was its greatest expense. Using audited
financial information for the prior six years, and identifying direct costs, the road service cost
averaged $1438 per property. AHPOA calculated the right-of-way fee for each property by adding
up its direct costs and excluding all costs attributable to other services, together with the
proportional indirect costs of overhead divided by the number of properties. It stated that this was
an accepted accounting practice. Garbage collection added an average of $340 per unit to the cost,
bringing the total for the deeded services to $1778.
¶ 12. The court found that plaintiffs summarily disputed these costs, fees, and surcharge
but provided no tangible support for their contention that the fees and costs for road maintenance
and garbage removal were unreasonable. It noted that this Court had deemed AHPOA’s fees
reasonable in two other cases, including, in Brewin, the inclusion of overhead. See Alpine Haven
Prop. Owners’ Ass’n v. Brewin, 2018 VT 88, ¶¶ 15, 30, 208 Vt. 462, 198 A.3d 533; Alpine Haven
Prop. Owners Ass’n v. Deptula, 2003 VT 51, ¶ 26, 175 Vt. 559, 830 A.2d 78 (mem.). Citing
Brewin, 2018 VT 88, the trial court rejected plaintiffs’ assertion that AHPOA’s fees included items
and expenses that they, as nonmembers, should not have to pay. It found that AHPOA had
supported its requests with an audit report indicating its billing was accurate, while plaintiffs, in
response, simply “argued conclusions and innuendo while apparently foregoing discovery on the
billing issues and producing no submission which raises a material issue related to [AHPOA’s]
invoices.”
3
In fact, as discussed below, the fee includes overhead as well as a 15% surcharge for
nonmembers to account for nonmonetary contributions by AHPOA members.
5
¶ 13. The court rejected plaintiffs’ implied invitation to parse AHPOA’s billing in search
of items that plaintiffs found objectionable. The question here, the court explained, was whether
plaintiffs demonstrated that AHPOA breached the covenant of good faith and fair dealing in
calculating its fee. See Brewin, 2018 VT 88, ¶ 19. Based on the undisputed evidence, the court
concluded that they had not. The court thus ordered plaintiffs to pay the outstanding bills from
2011 to 2018. This appeal followed.
¶ 14. Plaintiffs argue that AHPOA failed to meet its burden of proof and show that it was
entitled to summary judgment. They complain that the court failed to critically examine “the
formal and substantive sufficiency of [AHPOA’s] submissions” and argue that the evidence does
not establish that AHPOA’s fee structure, which includes overhead, is reasonable. They further
contend that the court should not have accepted the “unsupported opinions of AHPOA’s
[e]xperts.” With respect to the Chalet Lots, they argue that they have the right to refuse garbage
service and they should not have to pay for this service if they refuse it. They also assert that they
should not have to pay the costs associated with removing snow from the roads because that is not
encompassed in road maintenance. As to the Large Lots, plaintiffs argue that they receive no
benefit from AHPOA’s road maintenance and thus should not have to pay for it. Plaintiffs argue
that our decisions in Deptula and Brewin are inapposite, the former because the plaintiffs there did
not engage in discovery regarding costs and the latter due to different deed terms.
¶ 15. We review the court’s summary judgment decision de novo, “using the same
standard as the trial court.” Morisseau v. Hannaford Bros., 2016 VT 17, ¶ 12, 201 Vt. 313, 141
A.3d 745. Summary judgment is appropriate “if the movant shows that there is no genuine dispute
as to any material fact and the movant is entitled to judgment as a matter of law.” V.R.C.P. 56(a).
“In determining whether a dispute over material facts exists, we accept as true allegations made in
opposition to the motion for summary judgment, so long as they are supported by affidavits or
other evidentiary material.” White v. Quechee Lakes Landowners’ Ass’n, 170 Vt. 25, 28, 742
6
A.2d 734, 736 (1999). “[T]he party opposing summary judgment may not rest upon the mere
allegations or denials in its pleadings, but must set forth specific facts showing that there is a
genuine issue for trial.” Id. (alteration omitted) (quotation omitted).
¶ 16. It is not entirely clear which party would have had the burden of proof at trial.
Plaintiffs filed a declaratory judgment action to “determine their deeded property rights” and “to
determine a reasonable fee for services they receive from [AHPOA].” AHPOA counterclaimed to
recover unpaid fees. We directed the trial court to answer two questions on remand, which relate
to both parties’ claims. The parties filed cross-motions for summary judgment. In that summary
judgment was granted on AHPOA’s collection claim (as opposed to plaintiffs’ claim for
declaratory relief), we conclude that AHPOA demonstrated its entitlement to summary judgment
here. See generally 10A C. Wright et al., Federal Practice and Procedure § 2727.1 (4th ed. 2020)
(explaining that “if the movant bears the burden of proof on a claim at trial, then its burden of
production [in support of a motion for summary judgment] is greater” and “[i]t must lay out the
elements of its claim, citing the facts it believes satisfies those elements, and demonstrating why
the record is so one-sided as to rule out the prospect of the nonmovant prevailing”).
I. Chalet Lots
¶ 17. We begin with the Chalet Lots. At the outset, we note, as did the trial court, that
we have twice rejected challenges by other homeowners to the reasonableness of AHPOA’s fees.
See Brewin, 2018 VT 88, ¶ 1; Deptula, 2003 VT 51, ¶ 1. While the deed language in Brewin
differs in part from that involved here, Brewin nonetheless guides our analysis with respect to the
Chalet Lots. We do not find Deptula distinguishable on the ground identified by plaintiffs to the
extent plaintiffs’ argument can be understood. The legal principles we enunciated there plainly
apply in this case. See 2003 VT 51, ¶¶ 23, 26 (explaining that deeds at issue allowed AHPOA to
“collect a reasonable fee, as opposed to requiring a pro rata share of actual costs,” and that,
“[c]onsidering the entire record,” homeowners raised no genuine issue of material fact showing
7
that the nonmembers’ rate structure or fees were unreasonable,” and recognizing that “repeated
judicial determinations ha[d] reached the same conclusion”).
¶ 18. In Brewin, 2018 VT 88, AHPOA filed suit to collect unpaid annual assessments
from the defendants, who owned a Chalet Lot. As here, the defendants’ deed required AHPOA to
maintain the right-of-way, supply water, supply garbage removal, and maintain the streetlights.
The deed provided that these services would be provided “at a fee to be determined by the grantor.”
Id. ¶ 6. We held that AHPOA’s fee was “subject to the implied covenant of good faith and fair
dealing,” and thus, “the appropriate question” was “whether the fee that AHPOA charged fell
beyond the bounds of reasonableness.” Id. ¶¶ 18, 19. We are faced with a similar question here.
¶ 19. We concluded in Brewin that the defendants failed to “establish that AHPOA
violated the community standards of decency, fairness or reasonableness that the covenant of good
faith and fair dealing seeks to protect.” Id. ¶ 20 (quotation omitted). We emphasized that “AHPOA
presented substantial evidence to support the reasonableness of its assessment, [and] [the]
defendants presented no evidence of bad faith.” Id. We found unpersuasive “[the] defendants’
two primary counterarguments—[that] they should only be accountable for their share of that
portion of the Alpine Haven road network that is coextensive with their right-of-way and that they
should not be compelled to share in the full cost of the overhead associated with AHPOA’s
performance of its duties.” Id.
¶ 20. In reaching our decision, we recounted the “substantial evidence” that AHPOA
presented “to support the reasonableness of its assessment.” Id. ¶ 21. AHPOA explained why it
was neither feasible nor reasonable to base its fees on “actual use.” Id. ¶ 22. The trial court had
determined “that AHPOA’s assessment reflected its expenses,” and we noted that we had “deemed
the precise approach taken by AHPOA—an annual fee based on actual costs plus overhead—to be
reasonable” in a prior case. Id. ¶ 24. Indeed, we found the same fee, adjusted for inflation,
reasonable in Deptula. Id.
8
¶ 21. We found the assessment within the bounds of reason even if the defendants were
correct that their deed obligated them to pay only for the use of a limited right-of-way, rather than
share in the costs of the entire road network. Id. ¶ 26. We also found that AHPOA’s inclusion of
overhead costs in its annual assessment did not show bad faith and there was no showing that the
overhead charged was unreasonable. Id. ¶¶ 28-29. “We thus conclude[d], as a matter of law, that
AHPOA did not breach the covenant of good faith and fair dealing in determining the fee charged
to [the] defendants for its services.” Id. ¶ 30.
¶ 22. We reach the same conclusion here with respect to the Chalet Lots. As in Brewin,
the fee that AHPOA charges must be “reasonable,” i.e., “within the bounds of reason.”4 Id. ¶ 26.
The term “reasonable” is used expressly in plaintiffs’ deeds and need not be implied as in Brewin.
As in Brewin, AHPOA submitted extensive evidence in support of its summary judgment motion
to show how it calculated its fees and why its fees were reasonable. This included, among other
things: deposition testimony from Nicholas Barletta, a former Certified Public Accountant and
AHPOA president; the Service Costs and Fee Structure Reports he developed based on his review
of six years of expenses; a letter from a CPA firm that reviewed the Fee Structure Reports; an
affidavit from Mr. Barletta; an affidavit from Michael Patch, who was an expert witness on road
costs and fees, and who opined that the overall road costs were reasonable and less expensive than
those in other developments; and an affidavit from Walter Knight, an AHPOA board member, who
4
As in Brewin, “the analysis in this case” with respect to the Chalet Lot plaintiffs “begins
and ends with the provisions in [their] deeds, which allow AHPOA to set the fees, subject to the
constraints of good faith and fair dealing.” 2018 VT 88, ¶ 15. Given that their deeds allow
AHPOA to charge a reasonable fee for the services it provides, we reject plaintiffs’ suggestion that
the equitable principles of Hubbard, 144 Vt. 373, 477 A.2d 972, apply. See Brewin, 2018 VT 88,
¶ 17 (so holding) (citing Hubbard, 144 Vt. at 375-76, 477 A.2d at 973 (“The obligation to
contribute [rateably to the discharge of the burdens incident to the existence of the common
benefit] applies in the absence of an express agreement . . . .”) and 19 V.S.A. § 2702 (“In the
absence of an express agreement or requirement governing maintenance of a private road, when
more than one person enjoys a common benefit from a private road, each person shall contribute
rateably to the cost of maintaining the private road . . . .” (emphasis added)).
9
attested to his experience in property acquisition and development in Vermont and expressed his
opinion that ease of road access significantly increases the value of parcels of land, and who also
outlined ways in which road maintenance benefited the Large Lots. Plaintiffs did not, in response,
provide evidence to show that AHPOA’s fee was unreasonable. Its conclusory assertions do not
suffice.
¶ 23. We find plaintiffs’ attacks on AHPOA’s evidence unpersuasive. As set forth above,
AHPOA provided sufficient evidence to support its summary judgment motion. Based on its
analysis of six years of costs, it created a tiered fee structure. It identified particular service areas
and calculated overhead by establishing what percentage of costs each service area represents, and
it then applied this percentage to the total overhead.
¶ 24. Contrary to plaintiffs’ assertion, AHPOA’s fee schedule was both examined and
supported. Mr. Barletta was AHPOA’s president and plaintiffs do not dispute that he had “a long
career doing financial work” and that he was a retired CPA. He developed the tiered fee structure
based on his review of six years of costs and he testified that, based on his experience, the fee
structure was reasonable for all classes of Alpine Haven owners. He also testified that an outside
CPA firm had reviewed and analyzed the fee schedule. Mr. Patch testified as an expert that the
road fees were reasonable. In his affidavit, he described his extensive experience, the evidence
that he relied on to reach his conclusion, the conditions in Alpine Haven that affect road
maintenance, AHPOA’s responsibilities with respect to road management, his visit to the site and
review of the road system, his meetings with AHPOA road staff and his review of hourly costs,
material costs, maintenance schedules, and equipment. He based his opinion on his expertise in
establishing and maintaining roads and his review of these materials. Plaintiffs’ assertion that
AHPOA’s experts provided “nothing but a bottom line,” Mid-State Fertilizer Co. v. Exch. Nat’l
Bank of Chicago, 877 F.2d 1333, 1339 (7th Cir. 1989), is belied by the record.
10
¶ 25. We note, moreover, that plaintiffs could have deposed AHPOA’s road expert or put
forth evidence from their own experts, but they did not do so. It is not sufficient to claim the fees
are “unreasonable” simply because they are not broken down in the way that plaintiffs seek or
because they are not calculated the way plaintiffs argue they should be. Plaintiffs needed to
provide evidence in support of these assertions, not just conclusory arguments.
¶ 26. We found the inclusion of overhead and the amount of overhead reasonable in
Brewin, and we find no basis to reach a different conclusion here. 2018 VT 88, ¶¶ 28-29
(concluding that plaintiffs failed to show that “AHPOA acted in bad faith by including its overhead
costs in its annual assessment” and failed to show that overhead costs, which included litigation-
related expenses, were unreasonable). AHPOA’s overhead costs are based on a percentage of its
total costs by category. Plaintiffs pay for deeded services and a share of overhead attributable to
these services. AHPOA was not required to provide plaintiffs with a detailed breakdown of
overhead costs and its failure to do so does not create a factual dispute, as plaintiffs argue. Its
decision to adjust the overhead costs for certain seasonable services, like the pool and driveway
plowing, that share overhead with other year-round services was reasonable.
¶ 27. AHPOA also provided an undisputed reasoned basis for its imposition of an
additional service fee on nonmembers. In his affidavit, Mr. Barletta explained that AHPOA
members had a responsibility and liability that nonmembers did not. He stated that members
donated their time and expertise to manage and operate AHPOA’s resources in a way that benefits
the entire Alpine Haven community. The 15% surcharge was added to account for the
nonmonetary contribution of AHPOA members. It is reasonable to require all homeowners who
share and benefit from the work that goes into providing deeded services to share the cost of that
service, including attempting to equalize nonmonetary contributions among Alpine Haven
residents. The resulting fee is less than the member fee and within the bounds of reasonableness.
11
¶ 28. With respect to the provision of garbage service we agree with the trial court that
plaintiffs’ deeds plainly do not condition AHPOA’s right to charge a reasonable fee for this service
on plaintiffs’ actual use of this service. Plaintiffs indicated in their response to interrogatories that
they want the option of periodically stopping, but not formally terminating, their deeded right to
garbage removal. In his affidavit, Mr. Barletta averred that AHPOA did not provide rebates to
homeowners who periodically declined garbage service because AHPOA had an obligation to
provide the service and it incurred costs to maintain its capacity to do so. Absent a formal and
final relinquishment of plaintiffs’ right to garbage removal under their deeds, it is reasonable for
AHPOA to include a charge for garbage removal as part of a “reasonable fee” to account for its
fixed costs in providing this service and to ensure its ability to continue providing this service in
the future.
¶ 29. Plaintiffs argue that the garbage-removal provision in their deeds does not run with
the land, but they do not recite the elements applicable to such an assertion or discuss why they
are not satisfied here. See Albright v. Fish, 136 Vt. 387, 393, 394 A.2d 1117, 1120 (1978) (stating
that for covenant to run with the land, it “must be in writing,” “the parties must intend that the
covenant run with the land,” “the covenant must ‘touch and concern’ the land,” and “there must
be privity of estate between the parties”). Their briefing on this point is inadequate. See Johnson
v. Johnson, 158 Vt. 160, 164 n.*, 605 A.2d 857, 859 n.* (1992) (stating that this Court will not
address contentions so inadequately briefed as to fail to minimally meet standards of V.R.A.P.
28(a)); V.R.A.P. 28(a)(4) (providing that appellant’s brief should explain what issues are
presented, how they were preserved, and what appellant’s contentions are on appeal, with citations
to authorities, statutes, and parts of record relied upon).
¶ 30. In support of this argument, plaintiffs simply assert that if the Alpine Haven
property owner in 171234 Canada Inc. v. AHA Water Coop., Inc. 2008 VT 115, 184 Vt. 633, 968
A.2d 303 (mem.), was allowed to terminate a deed provision stating that the grantor would provide
12
water to its premises, then “[i]t is difficult to imagine that the grantor would have intended to have
customers to be bound to his system of garbage collection.” There is no basis to infer such intent
here. In 171234 Canada Inc., the trial court found the applicable covenant—wherein the grantor
“agree[d] to supply water to said premises as now piped”—to be ambiguous. 2008 VT 115, ¶ 2.
To support its interpretation of this ambiguous provision, the property owner submitted an
“affidavit from the original developer of Alpine Haven, who stated that his intent in drafting the
covenant language was to require lot owners to pay for water only if they chose to receive it.” Id.
¶ 5. The trial court’s decision rested largely on this affidavit; it further found that the property
owner’s decision to terminate the water service was consistent with the bylaws in effect at the
time, a position that was uncontested. Id. ¶¶ 7, 13.
¶ 31. Plaintiffs did not present any evidence similar to that presented in 171234 Canada
Inc. and their reliance on this case is unpersuasive. Because plaintiffs offer no support for the
premise of their argument, we do not consider their assertion that if garbage removal “is not a
deeded servitude,” then it “must be a service contract.”
¶ 32. Finally, we conclude as a matter of law that clearing the roads of snow lies within
a commonsense understanding of the term “maintenance.” See, e.g., In re Vt. State Emps.’ Ass’n,
2005 VT 135, ¶ 14, 179 Vt. 578, 893 A.2d 338 (mem.) (“Where, as here, the language of a contract
is clear, the parties are presumed to be bound by the plain and ordinary meaning of the language
used.”). It is a necessary part of keeping the roads in good and reasonable condition as required
by the terms of the Chalet Lot deeds.
¶ 33. We find plaintiffs’ reliance on Croton River Club, Inc. v. Half Moon Bay
Homeowners Ass’n (In re Croton River Club, Inc.), 52 F.3d 41 (2d Cir. 1995), misplaced. In that
case, the court reviewed an allocation made by a homeowners’ association for a planned
community that included a marina. Individuals who owned marina slips, but not homes, were
charged a portion of the annual budget, but only homeowners could vote on the budget allocations.
13
During the period in question, the homeowners voted to have the owners of the marina slips pay a
much larger share of the budget than in prior years—53% as opposed to 14.25%—“a three-fold
percentage increase in the amount of the allocation from previous years and over an eight-fold
increase in the dollar amount of the allocation initially recommended by the managing agent for
the Homeowners Association.” Id. at 43.
¶ 34. The court determined that this allocation was not protected by the business
judgment rule, which “precludes judicial inquiry into the actions of corporate directors so long as
those actions were taken in good faith and after a reasonable investigation.” Id. at 44. “[I]f the
business judgment rule does not protect a board’s decision, then the burden falls upon the board to
demonstrate that its actions were reasonable and/or fair.” Id.
¶ 35. The Croton court found that the “Homeowners Association failed to carry the
burden of showing reasonableness.” Id. at 45. Its allocation “included a number of line items
representing expenses that either did not benefit or only tangentially benefited the marina
slipowners,” including paying more than half of “the salary of the manager of the
residences . . . even though the manager has no duties relating to the marina” and paying pool
expenses when marina slipowners were not allowed to use the pool. Id. The court also found “a
53% allocation for the marina . . . facially unreasonable because the different wear and tear on
property resulting from year-long residential use [was] significantly greater than seasonal
riverbank use.” Id. Based on these shortcomings, the court found the allocation “so unreasonable
that bad faith must be inferred.” Id. It determined that “[t]he record strongly indicates that the
dominating consideration in fashioning the Marina Allocation was the residential owners’ desire
to lessen their own costs and that the incantations of the business judgment rule [were] driven by
the lack of a legitimate rationale for the Allocation.” Id.
¶ 36. We are faced with a much different situation here. The business judgment rule does
not apply, nor does the burden-shifting analysis identified by the court above. Plaintiffs here made
14
no showing of bad faith, and certainly we do not find AHPOA’s fee unreasonable on its face. The
fact remains that plaintiffs failed to put forth any evidence that would create a material question of
fact as to the reasonableness of AHPOA’s fee. Summary judgment was properly granted to
AHPOA with respect to the Chalet Lot plaintiffs.
II. Large Lots
¶ 37. We similarly conclude that AHPOA was entitled to judgment as a matter of law
with respect to its annual assessment for Large Lot owners. Plaintiffs do not dispute the equitable
and statutory requirement that they contribute ratably. They simply argue that they receive no
benefit at all from the roads and thus should not have to contribute.
¶ 38. This argument is without merit for the reasons identified by the trial court.
Plaintiffs purchased land in Alpine Haven knowing that their lots were served by a private road
network. They clearly receive an ongoing benefit from AHPOA’s road maintenance. Plaintiffs
complain that there is no written AHPOA board policy on this point, but they do not explain why
a written AHPOA board policy would be needed to reach this conclusion. They also assert
generally that there is no evidence of “benefit” as that term is used in Hubbard, 144 Vt. 373, 477
A.2d 972, but they do not specify what that means or what language in Hubbard they rely on.
¶ 39. We held in Hubbard that the defendant lot owners must pay the “pro rata share of
costs for the maintenance of a common roadway” based on “the equitable principle that when
several persons enjoy a common benefit, all must contribute rateably to the discharge of the
burdens incident to the existence of the benefit.” 144 Vt. at 374-75, 477 A.2d at 973 (quotation
omitted). We apply that same equitable principle here. Not only are plaintiffs afforded the
continuing ability to access their own property, AHPOA also presented evidence to support its
contention that the value of their property is enhanced by their continuing right to use the
development’s roads.
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¶ 40. Even if plaintiffs paid for the inclusion of a deeded right-of-way at the time they
purchased their properties, as they assert, their purchase price did not cover the ongoing
maintenance costs. Given the benefit they receive, it is equitable, and consistent with 19 V.S.A.
§ 2702, for plaintiffs to contribute to maintenance of the road network within the development.
See In re Goldsmith’s Estate, 25 N.Y.S.2d 419, 424 (Sur. Ct. 1940) (“A ratable contribution
normally means a contribution by everybody in accordance with the benefits received.”); see also
Restatement (Third) of Prop.: Servitudes § 4.13 cmt. e (2000) (recognizing that “basis of fair
apportionment will vary depending on the circumstances”). We note that it would be impossible
for AHPOA to know which roads plaintiffs used and to charge them accordingly. Plaintiffs have
the right to use all of the roads and it is reasonable and equitable for them to contribute toward
their upkeep whether they use them or not. We find no basis to disturb the court’s decision.
Affirmed.
FOR THE COURT:
Chief Justice
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