Darlene Jevne v. The Pass, LLC , 416 P.3d 1257 ( 2018 )

FILED
MAY 10, 2018
In the Office of the Clerk of Court
WA State Court of Appeals, Division III
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION THREE
DARLENE JEVNE, )
) No. 34939-0-III
Appellant, )
)
v. )
)
THE PASS, LLC, a Washington limited ) PUBLISHED OPINION
liability company, d/b/a The Pass Life, and )
BRYCE PHILLIPS and JANE DOE )
PHILLIPS, husband and wife and their )
marital community, )
)
Respondents. )
KORSMO, J. — Darlene Jevne brought this action to assert the rights of her
homeowners’ association, even though that group did not authorize her to do so.
Concluding that she lacked standing to pursue this case under these facts, we affirm,
although on different grounds, the trial court’s decision to dismiss the case on summary
judgment.
FACTS
This litigation centers on residential developments at Snoqualmie Pass. Ms. Jevne
is a resident of one such development, a planned unit development known as The Village at
the Summit. Respondent is The Pass LLC, developer of a community adjacent to The
No. 34939-0-III
The Pass, LLC v. Jevne
Village. At issue is a surface water retention pond, allegedly belonging to the homeowners
association (HOA) of The Village, but used by both The Village and The Pass.
When The Village was platted in 1990 by Snoqualmie Summit Inn, Inc.
(Snoqualmie), the property that Ms. Jevne ultimately acquired was listed as Lot 31.
Across the street from Lot 31 is Tract A, the retention pond. Tract E on that plat map, a
portion of The Village, was reserved for subsequent development. An easement granted
Tract E the right to drain its surface water into Tract A. Snoqualmie subsequently sold
Tract E to The Pass, which then began developing the property. Whether or not there are
any individual property owners of lots within Tract E, and whether they or The Pass are
also members of the HOA, is not clear in our record.1
In 2013, operating with the permission of Snoqualmie, The Pass removed three
trees from Tract A, ran a drain pipe into that lot, and made other efforts to improve the
tract’s ability to hold surface water. In the fall of 2014, Ms. Jevne purchased Lot 31 and
became a member of the HOA. The following year, she filed the current action in her
own name against The Pass LLC and its manager.
The complaint alleged that the HOA owned Tract A and stated claims for damages
and injunctive relief resulting from trespass, water drainage trespass, nuisance, and
1
The Pass answered the complaint and acknowledged it was not a member of the
HOA and was uncertain if its property was intended to be included within the HOA.
Clerk’s Papers (CP) at 13.
2
No. 34939-0-III
The Pass, LLC v. Jevne
overburdening an easement. The complaint contained no allegations that Ms. Jevne had
been authorized to sue on behalf of the HOA or that she had requested permission of the
HOA to act. The Pass answered the complaint and alleged that Snoqualmie owned Tract
A and that it had acted with permission of Snoqualmie. It also asserted that Ms. Jevne
lacked standing to pursue the action.
The Pass subsequently brought a motion to dismiss pursuant to CR 12(b)(6),2
alleging that Ms. Jevne lacked standing for several reasons, including (1) neither Ms.
Jevne nor the HOA owned Tract A, (2) Ms. Jevne did not allege any damage to her own
property, and (3) Ms. Jevne acquired her land after the actions she complained about.
Clerk’s Papers (CP) at 231, 234. In response, Ms. Jevne claimed that Tract A had been
conveyed to the HOA by the 1990 plat documents and that as a member of the HOA, she
had a contingent interest in the property that gave her standing to act. CP at 18-27.
Believing that there were unresolved factual questions that needed to be
determined, the trial court denied the motion to dismiss and a subsequent motion for
reconsideration. Several months later, respondents brought a motion for summary
judgment on several theories. The trial court ultimately granted that motion and
dismissed plaintiff’s case.
2
The Pass also included evidence outside of the record and correctly noted that its
motion was properly treated as a summary judgment if that evidence was considered. CP
at 234.
3
No. 34939-0-III
The Pass, LLC v. Jevne
Ms. Jevne then appealed to this court from the summary judgment ruling. The
Pass cross appealed from the denial of its motion to dismiss for lack of standing. The
parties presented oral argument on the case.
ANALYSIS
The sole issue we address is the dispositive matter of standing asserted in the cross
appeal. Ms. Jevne failed to establish her authority to bring this suit.
“Every action shall be prosecuted in the name of the real party in interest.”
CR 17(a). The purpose of this rule is to “‘protect the defendant against a subsequent
action by the party actually entitled to recover, and to insure generally that the judgment
will have its proper effect as res judicata.’” Beal v. City of Seattle, 134 Wash. 2d 769, 777,
954 P.2d 237 (1998) (quoting 3A JAMES WM. MOORE, MOORE’S FEDERAL PRACTICE ¶
17.01[8] (Daniel R. Coquillette et al. eds., 2d ed. 1996)).
The issue of standing is reviewed de novo by appellate courts. Knight v. City of
Yelm, 173 Wash. 2d 325, 336, 267 P.3d 973 (2011). Standing is a jurisdictional concern
that can be presented for the first time on appeal. RAP 2.5(a)(1); Int’l Ass’n of
Firefighters, Local 1789 v. Spokane Airports, 146 Wash. 2d 207, 212-13 n.3, 45 P.3d 186
(2002). An appellate court can even raise the issue sua sponte. In re Recall of West, 156
Wash. 2d 244, 248, 126 P.3d 798 (2006); Branson v. Port of Seattle, 152 Wash. 2d 862, 875
n.6, 101 P.3d 67 (2004).
4
No. 34939-0-III
The Pass, LLC v. Jevne
A party has standing to pursue an action when she is within the protected zone of
interests and has suffered an injury in fact. Branson, 152 Wash. 2d at 875-76. “Stated
another way, a party has standing if it demonstrates ‘a real interest in the subject matter of
the lawsuit, that is, a present, substantial interest, as distinguished from a mere
expectancy, or future, contingent interest, and the party must show that a benefit will
accrue it by the relief granted.’” Timberlane Homeowners Ass’n v. Brame, 79 Wash. App.
303, 308, 901 P.2d 1074 (1995) (quoting Primark, Inc. v. Burien Gardens Assocs., 63 Wn.
App. 900, 907, 823 P.2d 1116 (1992)).
In cases of third party standing, Washington courts apply the three factors used by
the United States Supreme Court:
The litigant must have suffered an “injury in fact,” thus giving him or her a
“sufficiently concrete interest” in the outcome of the issue in dispute, . . .
the litigant must have a close relation to the third party, . . . and there must
exist some hindrance to the third party’s ability to protect his or her own
interests.
Powers v. Ohio, 499 U.S. 400, 411, 111 S. Ct. 1364, 113 L. Ed. 2d 411 (1991) (internal
citations omitted); see T.S. v. Boy Scouts of Am., 157 Wash. 2d 416, 424 n.6, 138 P.3d 1053
(2006) (citing Mearns v. Scharbach, 103 Wash. App. 498, 512, 12 P.3d 1048 (2000));
State v. Burch, 65 Wash. App. 828, 837, 830 P.2d 357 (1992).
Critically important here is CR 23.1 involving derivative actions. It provides:
In a derivative action brought by one or more shareholders or members to
enforce a right of a corporation or of an unincorporated association, the
corporation or association having failed to enforce a right which may
5
No. 34939-0-III
The Pass, LLC v. Jevne
properly be asserted by it, the complaint shall be verified and shall allege
(a) that the plaintiff was a shareholder or member at the time of the
transaction of which the plaintiff complains or that the plaintiff’s share or
membership thereafter devolved on the plaintiff by operation of law, and
(b) that the action is not a collusive one to confer jurisdiction on a court of
this state which it would not otherwise have. The complaint shall also
allege with particularity the efforts, if any, made by the plaintiff to obtain
the action the plaintiff desires from the directors or comparable authority
and, if necessary, from the shareholders or members, and the reasons for the
plaintiff’s failure to obtain the action or for not making the effort. The
derivative action may not be maintained if it appears that the plaintiff does
not fairly and adequately represent the interests of the shareholders or
members similarly situated in enforcing the right of the corporation or
association.
(Emphasis added.)
Also to be considered is RCW 64.38.020, the statute granting authority for
homeowner’s associations to act. With respect to litigation, the statute provides that a
homeowner’s association may:
Institute, defend, or intervene in litigation or administrative proceedings in
its own name on behalf of itself or two or more owners on matters affecting
the homeowners’ association, but not on behalf of owners involved in
disputes that are not the responsibility of the association.
RCW 64.38.020(4).3
Assuming4 for purposes of this litigation that the HOA did own Tract A, Ms.
Jevne has not demonstrated her ability to assert that interest for the HOA under any of the
3
This provision is consistent with the authority granted nonprofit corporations.
See RCW 24.03.035.
4
Counsel for The Pass at oral argument likewise assumed that for purposes of this
litigation, Tract A could be treated as if it were owned by the HOA.
6
No. 34939-0-III
The Pass, LLC v. Jevne
tests for standing noted above. She does not qualify under CR 23.1. Despite her standing
having been challenged in the trial court, she neither pleaded her compliance with rule
23.1 nor answered the motion with proof that she qualified under the rule to represent the
interests of the HOA. She also does not appear to satisfy the requirements of the rule
since she was not a member of the association at the time of the events giving rise to this
litigation and our record does not reflect whether the HOA was even contacted about the
concerns that gave rise to this litigation.5 Standing is not conferred by CR 23.1.
Ms. Jevne also fails to establish first party standing in her own right or third party
standing to assert the rights of the HOA. Although we believe that membership in the
HOA undoubtedly put her in the zone of interest necessary to assert first party standing,
she did not establish that she had suffered an injury in fact. Indeed, it was uncontested
that her own property had suffered no damages from the use of Tract A. She had no first
party standing. Branson, 152 Wash. 2d at 875-76. Even under the alternative theory of
Timberlane, Ms. Jevne had nothing but a possible contingent future interest in the
property. That is insufficient. Timberlane, 79 Wash. App. at 308.
Ms. Jevne also is unable to establish third party standing under the Powers test.
She did not establish the personal injury that gave her a “concrete interest” in the
outcome. 499 U.S. at 411. She likewise did not demonstrate how the HOA was hindered
5
Counsel for both parties advised us at oral argument that, although not in the
record of this litigation, the HOA was advised and chose not to become involved.
7
No. 34939-0-III
The Pass, LLC v. Jevne
in protecting its own interests. Id. Rather than being prevented from acting, it appears
that the HOA chose not to become involved. Third party standing simply was not
available here.
Against these authorities, Ms. Jevne asserts standing under the decision in
Schroeder v. Meridian Imp. Club, 36 Wash. 2d 925, 221 P.2d 544 (1950). Even assuming
that Schroeder still has validity under the modern statutes governing corporation and
homeowner’s association litigation authority, a close reading of that decision undercuts
Ms. Jevne’s argument. There a neighborhood had formed a social club opened to all
property owners within the vicinity. The club eventually became incorporated and
certain members purchased a building that they held in trust for the use of the club. Id. at
927. Declining membership led to a decision by the trustees to sell the property. Id.
After the trustees were repaid the purchase expenses, the remaining $274.80 was
distributed to the paid-up members of the club. Id. at 928. Several classes of disaffected
neighbors challenged the decision by seeking to set aside the sale. Id.
Although the trial court found standing and determined that the sale should be set
aside due to violation of the by-laws, the Washington Supreme Court reversed due to lack
of standing. The court noted that under the governing corporate laws, a nonstock
corporation holds property for the benefit of its members, each of whom would be
entitled to a pro-rata share of the proceeds upon dissolution of the corporation. Id. at 930.
That right granted a present interest in the property of the corporation, but that right
8
No. 34939-0-III
The Pass, LLC v. Jevne
“exists as an incident of membership and not because of any ownership of the property of
the corporation.” Id. Based on these statements from Schroeder, Ms. Jevne claims
standing due to the possibility that she will still be a member of the HOA at the time it
might dissolve. That claim fails under Schroeder’s disposition of the standing arguments.
The court determined that none of the classes of members who brought suit had
standing. Those who had not paid membership dues were not members even though they
were eligible to join. Id. at 932. Those who were trustees were unable to sue because the
club had not defaulted on its obligations; the other trustees had simply decided to disband
due to the declining membership. Id. at 932-33. Finally, those members who had not yet
paid their dues for the year were not members entitled to notice or a share of the
proceeds. Id. at 933-34. Thus, all of the plaintiffs lacked standing and the case was
reversed. Id. at 934.
Ms. Jevne argues that, unlike two of the classes at issue in Schroeder, she was an
active member of the HOA and could sue due to her contingent interest in the disposition
of Tract A in the event the HOA dissolves. This interpretation of Schroeder puts it in
conflict with Timberlane and Primark, both of which recognized that a contingent
interest fails to grant standing. Initially, it is easy enough to distinguish Schroeder on its
facts from Ms. Jevne’s situation. The corporation at issue in Schroeder was undergoing
dissolution. Id. Here, the HOA was not dissolving, so there was no current expectancy
that ripened the otherwise contingent interest into an enforceable present interest.
9
No. 34939-0-111
The Pass, LLC v. Jevne
Secondly, the discussion in Schroeder, even assuming that Washington's corporate laws
were the same on this topic in 1950 as they are today, technically was dicta since none of
the nontrustee plaintiffs6 were current members of the club. The issue of whether
corporate members have an enforceable current property interest when the corporation
was not undergoing dissolution was not before the Schroeder court. Ms. Jevne's claim
that she has standing under that decision simply is not supported by the facts of the case.
Instead, we believe that the rule of Timberlane and Primark governs these facts.
Ms. Jevne has not established standing to assert the rights of the HOA under either CR
23.1 or the alternative tests for standing. Accordingly, the motion to dismiss should have
been granted.
The judgment is affirmed.
WE CONCUR:
Fearifl&. Pennell, A.CJ.
6
Tellingly, even the trustee plaintiffs who had purchased the property for the club
lacked standing because the club had not defaulted on its obligations and had paid back
the trustees' contributions with interest. Schroeder, 36 Wash. 2d at 932-33. If those
plaintiffs lacked standing despite their direct relationship to the property, a mere member
plaintiff certainly would lack standing under Schroeder.
10