Burien Town Square Condominium Assoc., App v. Burien Town Square Parcel 1, Llc, Resps , 416 P.3d 1286 ( 2018 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
BURIEN TOWN SQUARE
CONDOMINIUM ASSOCATION, No. 76502-7-1
a Washington non-profit corporation,
DIVISION ONE
Appellant,
V. PUBLISHED OPINION
BURIEN TOWN SQUARE PARCEL 1,
LLC, a Washington limited liability
company; and BURIEN TOWN
SQUARE, LLC, a Washington limited 57
.
liability company; and JOHN DOES -F1 _
1-100, r•1
mm, C-nri
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Respondents. FILED: May 14, 2018 r-
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LEACH, J. — Burien Town Square Condominium Association (Association) —
sued Burien Town Square LLC and Burien Town Square Parcel 1 LLC
(collectively BTS) for alleged violations of the Washington Condominium Act
(WCA)1. The Association appeals the trial court's dismissal of those claims as
barred by the statute of limitations. Because a period of declarant control tolled
the statute of limitations, we reverse and remand for further proceedings
consistent with this opinion.
1 Ch. 64.34 RCW.
No. 76502-7-1 /2
FACTS
BTS developed and owned a condominium complex in Burien. BTS
substantially completed its construction by May 1, 2009. BTS sold the first unit
on May 19, 2009. On July 8, 2009, the city of Burien issued a certificate of
occupancy for the condominium.
In November 2009, BTS defaulted on its construction loan. The lender
foreclosed. On November 2, 2010, BTS Marketing (Marketing) acquired the
condominium as part of a settlement agreement. Marketing continued to sell
units. It kept control of the building's operation by retaining the right to appoint
the board of directors of the condominium association.
In August 2013, the Association, which Marketing still controlled, received
notice of a construction defect. The Association took no action at that time.
In March 2014, unit owners first made up the majority of the board and
gained control of the Association. On February 26, 2015, the Association notified
BTS and Marketing about certain construction defects and asked for them to be
fixed. On April 29, 2015, the Association filed several claims against BTS,
including claims under the WCA. BTS moved for summary judgment, asserting
that the statute of limitations barred the WCA claims. The trial court agreed and
dismissed the WCA claims. We denied the Association's request for
discretionary review. At the Association's request, the trial court dismissed the
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No. 76502-7-1 / 3
Association's remaining claims. This allowed the Association to appeal the
dismissal of its WCA claims.
STANDARD OF REVIEW
We review a trial court's order granting summary judgment de novo.2
Summary judgment is appropriate if, viewing the facts and reasonable inferences
in the light most favorable to the nonmoving party, no genuine issues of material
fact exist and the movant is entitled to judgment as a matter of law.3
Because statutory interpretation presents a question of law, we also
review it de novo.4 The purpose of statutory interpretation is to determine the
intent of the legislature.5 When interpreting a statute, we first look to its plain
language.5 If a statute's language is plain, we will determine the legislature's
intent from the words of the statute itself.7
2 Michak v. Transnation Title Ins. Co., 148 Wash. 2d 788, 794, 64 P.3d 22
(2003).
3 Michak, 148 Wash. 2d at 794-95.
4Agrilink Foods, Inc. v. Dep't of Revenue, 153 Wash. 2d 392, 396, 103 P.3d
1226 (2005).
5 Campbell v. Dep't of Soc. & Health Servs., 150 Wash. 2d 881, 894, 83 P.3d
999(2004).
6 HomeStreet, Inc. v. Dep't of Revenue, 166 Wash. 2d 444, 451, 210 P.3d
297(2009).
7 Agrilink Foods, 153 Wash. 2d at 396.
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ANALYSIS
Statute of Limitations
The Association contends that the statute of limitations does not bar its
claims because certain provisions in the WCA tolled the limitations period until
after the Association filed its claim. We agree.
The WCA has a four-year statute of limitations for construction defects.8
But this statute does not bar an action for breach involving a common element of
the condominium until one year after the period of declarant control ends" The
statute states that an action
must be commenced within four years after the cause of action
accrues: PROVIDED, That the period for commencing an action
for a breach accruing pursuant to subsection (2)(b) of this section
shall not expire prior to one year after termination of the period of
declarant control, if any, under[RCW 64.34.308(5)].tM
Section (2)(b) provides that a cause of action involving a common element
accrues at the latest of three dates: (1)when the first unit was conveyed to a
bona fide purchaser, (2) when the common element was completed, or (3)
when the common element was added."
Here, the Association's WCA claims involve the common elements of the
condominium. The parties agree that BTS conveyed the first unit on May 19,
9 RCW 64.34.452(1).
9 RCW 64.34.452(1),(2)(b).
10 RCW 64.34.452(1).
11 RCW 64.34.452(2)(b).
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No. 76502-7-1 / 5,
2009. They also agree that construction was complete and all common elements
were added and completed by July 8, 2009, the date the city of Burien issued the
certificate of occupancy. Thus, the Association's cause of action accrued no
later than July 8, 2009.
BTS contends that the statute of limitations expired in July 2013. If
correct, this means that the Association's WCA claims, filed on April 29, 2015,
are barred. The Association responds that the statute of limitations would have
expired one year after the period of declarant control ended but was extended an
additional 105 days, to June 11, 2015, by its giving written notice of its claims.
The phrase "period of declarant control" describes the period when a
condominium developer retains control over the condominium unit owners'
association.12 "'Declarant control' means the right of the declarant or persons
designated by the declarant to appoint and remove officers and members of the
board of directors, or to veto or approve a proposed action of the board or
association."13
To create a condominium, the owner, as the "declarant," must record a
declaration with certain information, including a description of the property and
information about ownership.14 The WCA defines a declarant as
12 RCW 64.34.308(5)(a).
13 RCW 64.34.020(16).
14 RCW 64.34.020(15),.200,.216.
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No. 76502-7-1 /6
[a]ny person who is the owner of a fee interest in the real property
which is subjected to the declaration at the time of the recording of
an instrument pursuant to ROW 64.34.316 and who directly or
through one or more affiliates is materially involved in the
construction, marketing, or sale of units in the condominium created
by the recording of the instrument.1161
Primarily, the parties dispute how long, for purposes of the statute of
limitations, the period of declarant control lasted in this case. BTS asserts that
the period of declarant control ended when its own control ended. The
Association contends that the period of declarant control continued so long as
any declarant, not just BTS, controlled the composition of the board. We agree
with the Association.
The Association relies on ROW 64.34.316.16 The statute addresses what
happens to declarant rights in a foreclosure: Title declarant ceases to have any
special declarant rights."1 Whoever acquires the property succeeds to all
special declarant rights." It also addresses the effect of a foreclosure on the
period of declarant control: 'Nile period of declarant control as described in
15 ROW 64.34.020(15)(d).
16 BTS asserts that because the Association cites this provision for the first
time on appeal, we should not consider it. But although courts generally do not
consider new issues raised for the first time on appeal, they may consider new
authorities. RAP 2.5(a); Zonnebloem, LLC v. Blue Bay Holdings, LLC, 200 Wn.
App. 178, 183 n.1, 401 P.3d 468 (2017). Further, we determine the legislature's
intent by looking at the statute as a whole. Muckleshoot Indian Tribe v. Debit of
Ecology, 112 Wash. App. 712, 720-21, 50 P.3d 668 (2002). This provision relates
to the main issue disputed below and on appeal, and we consider it.
17 ROW 64.34.316(4)(a).
18 ROW 64.34.316(3).
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[RCW 64.34.308(5)] terminates unless the judgment or instrument conveying title
provides for transfer of all special declarant rights held by that declarant to a
successor declarant?" Here, after the foreclosure, BTS transferred special
declarant rights to Marketing as part of the settlement with its lender. BTS does
not dispute that Marketing acquired all declarant rights in the condominium.
Thus, under RCW 64.34.316, the period of declarant control continued after
Marketing took over as declarant.
The statutory interpretation urged by the Association advances the strong
consumer protection component of the WCA.2° A principal purpose of the WCA
is to provide protection to residential buyers of condominiums.21 When an
original declarant transfers declarant rights to a successor declarant, it remains
liable for the original construction.22 But BTS's interpretation would allow an
original declarant to avoid liability by conveying property to a successor declarant
and having the successor declarant keep control over the board until the statute
19 RCW 64.34.316(4)(b).
29 Eagle Point Condo. Owners Ass'n v. Coy, 102 Wash. App. 697, 713, 9
P.3d 898(2000).
21 Filmore LLLP v. Unit Owners Ass'n of Ctr. Pointe Condo., 183 Wash. App.
328, 343 & n.10, 333 P.3d 498 (2014): Park Ave. Condo. Owners Ass'n v.
Buchan Devs., LLC, 117 Wash. App. 369, 374-75, 71 P.3d 692(2003).
22 One Pac. Towers Homeowners' Ass'n v. HAL Real Estate Invs., Inc.,
148 Wash. 2d 319, 332, 61 P.3d 1094 (2002)("'A transferor is not relieved of any
obligation or liability arising before the transfer and remains liable for warranty
obligations imposed upon the transferor by this chapter.'" (quoting
RCW 64.34.316(2)(a))).
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of limitations expires. While the successor declarant might have liability for
breach of its fiduciary duties owed unit owners, that remedy might provide
incomplete relief for unit owners depending on a variety of variables, including
the capitalization of the successor and the unit owner's date of acquisition. Thus,
adopting BTS's interpretation of the period of declarant control would create a
loophole in the WCA's protection for unit owners.
BTS complains about the unfairness of leaving an original declarant open
to liability under the WCA indefinitely, subject only to certain actions by a
successor declarant. It also claims that the Association's interpretation frustrates
the purpose of a statute of limitation, noting that "Nile purpose of statutes of
limitations is to shield defendants and the judicial system from stale claims."23
But a statute of limitation should only protect against stale claims and not provide
a shield from almost all liability. We reject an interpretation of the WCA that
would allow a statute of limitations for claims involving condominium common
elements to expire before the unit owners ever gain control of the unit owners'
association.
Both the language of the WCA and public policy concerns support our
conclusion that the period of declarant control is a single period measured by the
fact of declarant control, not the term of a specific declarant's control. Thus, the
23 Burns v. McClinton, 135 Wash. App. 285, 293, 143 P.3d 630(2006).
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period of declarant control continued after BTS transferred control of the board to
Marketing as successor declarant. We consider the parties' arguments about the
end of the period of declarant control in light of this conclusion.
The WCA contains specific rules about the end of declarant control. The
declaration can provide a date for the end of the period of declarant contro1.24
But the WCA also provides for an end of the period of declarant contro1.25
RCW 64.34.308(5)(b) specifically states that a period of declarant control ends
no later than the earlier of
(i) Sixty days after conveyance of seventy-five percent of the units
which may be created to unit owners other than a declarant; (ii) two
years after the last conveyance or transfer of record of a unit except
as security for a debt; (iii) two years after any development right to
add new units was last exercised; or (iv) the date on which the
declarant records an amendment to the declaration pursuant to
which the declarant voluntarily surrenders the right to further
appoint and remove officers and members of the board of directors.
The Association contends that the period of declarant control ended on
March 1, 2014, when unit owners first gained control of the Association (section
308(5)(b)(i)). BTS contends that the period of declarant control ended either on
November 2, 2010, when it last had ownership and declarant rights (section
308(5)(b)(iv)) or on November 2, 2012, two years after BTS last exercised any
24 SeeRCW 64.34.308(5)(a).
25 RCW 64.34.308(5)(b).
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development rights (section 308(5)(b)(iii)). We address these contentions
chronologically.
First, BTS contends that the period of declarant control ended on
November 2, 2010. RCW 64.34.308(5)(b)(iv) states that the period of declarant
control ends on "the date on which the declarant records an amendment to the
declaration pursuant to which the declarant voluntarily surrenders the right to
further appoint and remove officers and members." BTS contends that it
surrendered control when Marketing became the owner. But the plain language
of this provision requires that the declarant record an amendment to the
declaration in which the declarant surrenders declarant rights. BTS never
recorded such an amendment. Further, although BTS gave up the power to
appoint and remove officers in November 2010, Marketing acquired that right
The unit owners did not gain control but remained subject to the control of a
declarant. We conclude that the condition described in section 308(5)(b)(iv) did
not occur when Marketing became successor declarant.
Alternatively, BTS contends that the period of declarant control ended on
November 2, 2012. RCW 64.34.308(5)(b)(iii) states that the period of declarant
control ends "two years after any development right to add new units was last
exercised."
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BTS asserts that it never exercised any development rights after
November 2010, when it lost its rights. But it incorrectly equates exercising its
rights with transferring its rights. The exercising of rights is not synonymous with
transferring rights. "Exercise" means "[t]o make use of" or "to implement the
terms of."26 "Transfer" means "pi° convey or remove from one place or one
person to another; to pass or hand over from one to another, esp[ecially] to
change over the possession or control of."27 The exercise of a development right
does not include a transfer of those rights. Nor does the WCA's definition of
development rights indicate that conveying property to a successor declarant
results in the end of the period of declarant control. The WCA defines
"development rights" as
any right or combination of rights reserved by a declarant in the
declaration to: (a)Add real property or improvements to a
condominium; (b) create units, common elements, or limited
common elements within real property included or added to a
condominium; (c)subdivide units or convert units into common
elements; (d) withdraw real property from a condominium; or
(e) reallocate limited common elements with respect to units that
have not been conveyed by the declarant.[281
BTS identifies no language in the WCA suggesting, let alone stating, that
transferring these rights constitutes an exercise of development rights under
28 BLACK'S LAW DICTIONARY 693(10th ed. 2014).
22 BLACK'S at 1727.
28 RCW 64.34.020(18).
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section 308(5)(b)(iii). Thus, the condition described in section 308(5)(b)(iii) did
not occur when BTS transferred development rights to Marketing.
The parties agree that the period of declarant control ended no later than
March 2014. RCW 64.34.308(5)(b)(i) states that the period of declarant control
ends 60 days after the conveyance of 75 percent of the units to unit owners other
than a declarant. In January 2014, Marketing notified the Association that 75
percent of the units in the building had been sold to individual owners. On March
1, 2014, a majority of the Association board members were unit owners.
Because the period of declarant control ended in March 2014, the time for filing a
WCA claim expired in March 2015, unless otherwise extended.29
The Association claims its written claim to BTS extended the statute of
limitations an additional 105 days to June 11, 2015, relying on RCW 64.50.020
and RCW 64.34.452(4). BTS provides no argument to the contrary. We agree
with the Association.
RCW 64.50.020(1) provides that in a construction defect action, the
claimant must provide notice to the construction professional 45 days before
filing a lawsuit. The claimant cannot file an action until that 45 days has
passed.3° RCW 64.34.452(4) tolls the statute of limitations until 60 days after this
45 day period. It states,
29 RCW 64.34.452(1)
3° RCW 64.50.020(1); see also RCW 64.34.452(4).
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No. 76502-7-1 / 13
If a written notice of claim is served under RCW 64.50.020 within
the time prescribed for the filing of an action under this chapter, the
statutes of limitation in this chapter and any applicable statutes of
repose for construction-related claims are tolled until sixty days
after the period of time during which the filing of an action is barred
under RCW 64.50.020.
The Association gave notice to BTS on February 26, 2015, within the time
for filing a WCA action. Thus, the statute of limitations tolled until 105 days later,
June 11, 2015.31 The Association timely filed its complaint on April 29, 2015,
before the statute of limitations expired.
Attorney Fees
The Association challenges the trial court's award of fees to BTS. The
WCA permits the court to award, "in an appropriate case," reasonable attorney
fees to the prevailing party:
If a declarant or any other person subject to this chapter fails to
comply with any provision hereof or any provision of the declaration
or bylaws, any person or class of persons adversely affected by the
failure to comply has a claim for appropriate relief. The court, in an
appropriate case, may award reasonable attorney's fees to the
prevailing party.1321
In view of our decision, no party has yet prevailed on the WCA claims, so neither
party has established an entitlement to fees in the trial court. We vacate the trial
court's award of fees.
31 The Association claims that the statute of limitations tolled until June 10,
but this is based on the date on the notice letter (February 25), not the date the
letter was delivered (February 26).
32 RCW 64.34.455.
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Both parties request fees on appeal. Although the Association prevails
here, no party has yet prevailed on the merits of the WCA claims. Thus, an
award of fees is premature. But the Association is entitled to an award of costs
upon its compliance with the applicable court rules.
CONCLUSION
We reverse. The period of declarant control tolled the statute of limitations
contained in RCW 64.34.452. The Association timely filed its WCA claims. We
reverse and remand for further proceedings consistent with this opinion.
WE CONCUR:
M ilt 1C..7..
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