Susan Corliss v. Admiral's Cove Beach Club ( 2016 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
ROBERT WILBUR and DUSTIN No. 73725-2-1
FREDERICK,
DIVISION ONE
Plaintiffs,
v. UNPUBLISHED OPINION
ADMIRAL'S COVE BEACH CLUB,
a Washington non-profit corporation; FILED: August 1,2016
and JEAN SALLS, MARIA
CHAMBERLAIN, KAREN SHAAK,
ROBERT PEETZ, ELSA PALMER,
ED DELAHANTY and DAN
JONES, individuals,
Defendants,
SUE CORLISS,
Appellant,
DUSTIN FREDERICK, ROBERT
WILBUR, ADMIRAL'S COVE
BEACH CLUB, a Washington
non-profit corporation, and its
BOARD OF DIRECTORS,
Respondents.
Leach, J. — In this dispute regarding interpretation of a nonprofit corporation's
governing documents, intervenor Susan Corliss appeals from an order granting partial
summary judgment and a declaratory judgment in favor of Robert Wilbur. Because
Wilbur failed to establish that he was entitled to such a judgment as a matter of law, we
reverse and remand for further proceedings.
No. 73725-2-1 / 2
FACTS
The Plat of Admiral's Cove, Divisions 1 through 7, is located on Whidbey Island.
Owners of lots within the plat are eligible for membership in the Admiral's Cove Beach
Club (Club), a nonprofit corporation. Incorporated in 1969, the Club governs the
development. Club members enjoy the use of Club-owned recreational facilities,
including an outdoor Olympic-sized pool with views of Puget Sound and the Olympic
Mountains. The Club owns other recreational assets: a large waterfront beach area,
fire pit and picnic area, volleyball and basketball courts, and a playground.
A Board of Directors (Board), elected by the members at the Club's annual
membership meeting, manages the Club's day-to-day operations. The Board levies
annual dues and is authorized to propose "special assessments" for unexpected costs
or maintenance "at any time." A simple majority vote is required to impose special
assessments on Club members. Club members vote by mail-in ballot.
Article V of the Club's articles of incorporation state its "purposes, objects and
powers." Pertinent to this lawsuit, these include the power:
1. To construct, install, maintain and/or own and operate athletic
and recreational facilities of all types and kinds for the benefit of the
members.
4. To purchase, take, receive, lease, take by gift, devise or
bequest, or otherwise acquire, own, hold, improve, use and otherwise deal
in and with real or personal property ....
5. To sell, convey, mortgage, pledge, lease, exchange, transfer
and otherwise dispose of all or any part of the property and assets.
No. 73725-2-1 / 3
The articles of incorporation make no specific reference to a pool, but the Club's
bylaws do. The Club's bylaws list two objectives: to "[pjrovide and operate recreational
facilities for the benefit of the members" and to "procure, maintain, operate, and protect
the recreational (and associated safety) concerns of the members of the community."
The bylaws also establish six standing committees. Two are devoted to the pool. The
Pool Operations and Safety Committee "set[s] policies for operation of the club
swimming pool, and establishes] and enforce[s] safety rules and procedures." The
Pool Maintenance and Improvement Committee is responsible for "maintenance of the
Club Swimming Pool and the operating machinery, the buildings housing the pool
equipment, rest rooms, office and fence enclosing the pool complex, pool supplies,
heating, lighting, etc." and "shall obtain estimates as necessary for accomplishing such
maintenance."
Over time, the pool fell into a state of disrepair. By 2012, it was largely unusable.
At the Club's October 2012 annual meeting, the members unanimously passed the
following motion:
By November 10, 2012, Pool Planning by members of the
Pool Maintenance, Long Range Planning and Budget
Committees will work with a nonresident facilitator, as an ex-
officio team member and may consult with legal counsel as
warranted . . . .
Under the overall objective of having the pool open as soon
as a funding and construction schedule allow, the committees
shall have three (3) tasks to complete by February 28, 2013,
or sooner:
No. 73725-2-1 / 4
(1) To identify and evaluate various options related to
the pool's future, including but not limited to needed
equipment, a permanent pool cover, and repairs to the
pool and its building, foundation, plumbing, and
electrical system, and to recommend the best cost and
timing options. A basic and simple plan to identify
projects for contractor bidding shall be developed to
guide these efforts; the plan shall also recommend an
implementation schedule for ADA [Americans with
Disability Act] compliance from both a financial and
legal standpoint.
(2) Investigate and develop payment options related to
assessment costs and dues under task one and to
select the approach that produces the best balance
between recreational benefits and costs to members.
The assessment total will be offset by the amount of
donations accumulated for that purpose.
(3) Upon completion of tasks 1 and 2, the committees
shall submit the findings to the Board and subsequently
work with Board as appropriate.
Over the next several months, committee members held meetings and gathered
cost estimates. A consultant's inspection revealed widespread problems with the pool
and pool buildings, and the consultant recommended significant renovations at a cost of
approximately $650,000. The committee presented this information to the Board.
In May 2013, the Board sent a ballot to all Club members for a vote about the
pool's future. The ballot presented two choices: (1) "refurbish, remodel and update the
pool," requiring a special assessment of approximately $650,000, or (2) "remove the
pool," requiring a special assessment of approximately $200,000. The Board included a
two-page "Frequently Asked Questions" document explaining various options and
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No. 73725-2-1 / 5
issues related to the vote. In a relatively close vote, a majority of Club members voted
to remove the pool instead of refurbish it.
In September 2013, Robert Wilbur, a "pro-pool" Club member, filed a lawsuit
against the Club seeking a declaration that (1) the May 2013 vote was invalid because it
was inconsistent with the October 2012 motion and (2) the Club's articles of
incorporation and bylaws did not permit the Board to remove or decommission the pool.
Wilbur also sought an injunction restraining the Club from taking any action to remove
the pool.
Wilbur moved for summary judgment. The Club took "no position" on the motion
and asked the trial court to issue a declaratory ruling clarifying its legal responsibilities
regarding the pool.1 Corliss, an "anti-pool" Club member, intervened and filed a cross
motion for dismissal of Wilbur's complaint.
The trial court granted partial summary judgment in favor of Wilbur and issued
the following declaratory judgment:
1. The Admiral's Cove Beach Club ("ACBC") swimming
pool and related facilities are among the athletic and
recreational facilities contemplated under Article V of
the Articles of Incorporation of ACBC which provides
that the purpose of ACBC is "[t]o construct, install,
maintain and/or own and operate athletic and
recreational facilities of all types and kinds for the
benefits of the members."
1After Wilbur filed his complaint but prior to the summary judgment hearing, Club
members held their annual elections and replaced several "anti-pool" directors with "pro-
pool" candidates.
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No. 73725-2-1/6
2. ACBC and its Board of Directors must adhere to the
requirements and directives set forth in the motion that
was made and approved at the Defendant's annual
membership meeting on October 27, 2012, unless said
motion is property repealed or amended to remove the
duties of the Board of Directors and ACBC, which
duties are presently embodied in this motion. That
particular motion, as approved, does not contain
language that could be construed to permit the
demolition or decommissioning of the swimming pool or
related facilities as an option for the membership's
future consideration.
3. The prior Board's action to present a ballot to the
membership with the option to decommission the pool
was contrary to the October 27, 2012, motion. It was
therefore invalid and of no force and effect.
6. In consideration of the applicable provisions of the
Articles of Incorporation and Bylaws, the context in
which they were promulgated, the circumstances
surrounding their promulgation, and the other rules for
their interpretation, the general power to dispose of
property as set forth in the Articles of Incorporation and
Bylaws governing ACBC, does not provide authority to
the Board to dispose of the ACBC swimming pool and
related facilities.
7. Any vote on a motion or other action item submitted to
the membership at a regular or special meeting of the
membership that would result in the demolition or
decommissioning of the ACBC swimming pool, would
be invalid and of no effect unless the governing
documents of ACBC were first properly amended or
changed to allow such action.
8. Under the governing documents as presently
constituted, the members of the Board of Directors of
ACBC have a legal duty and fiduciary obligation:
a. to maintain, repair and operate the swimming
pool and its related facilities in a reasonable
manner and as may be required by local, state
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No. 73725-2-1 / 7
and federal law and the governing documents
themselves; and
b. to take affirmative action, consistent with the
governing documents of Admiral's Cove Beach
Club, to budget for and raise funds through
properly authorized dues and assessments to
carry out these duties.
9. The Board's duties in this regard include sufficient
budgeting and funding decisions that will allow for the
future and continued operation and maintenance of the
swimming pool and related facilities.
The trial court denied Wilbur's request for injunctive relief. Corliss appeals.2
ANALYSIS
I. Necessary Parties
As a preliminary matter, we address Corliss's claim that the trial court lacked the
authority to enter a declaratory judgment because Wilbur failed to join all Club members
as necessary parties. Corliss relies on RCW 7.24.110. This statute requires that
"[w]hen declaratory relief is sought, all persons shall be made parties who have or claim
any interest which would be affected by the declaration, and no declaration shall
prejudice the rights of persons not parties to the proceeding." A "necessary party" for a
2 In her assignments of error, Corliss challenges the grant of partial summary
judgment in favor of Wilbur and the denial of her motion for summary judgment
dismissal. However, the trial court did not deny Corliss's motion. Corliss failed to
renote her motion following a request for a continuance, and it was not properly before
the trial court at the time of the hearing. Instead, the trial court declined to rule on
Corliss's cross motion as moot.
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No. 73725-2-1 / 8
declaratory judgment action is one "whose ability to protect its interest in the subject
matter of the litigation would be impeded by a judgment."3
We disagree with Corliss. There are only two positions in this case: that the Club
has the authority to remove the pool or that it does not. Both positions are adequately
represented by the parties to the case. The joinder of additional Club members as
parties was not necessary to resolve this controversy.
II. Summary Judgment
We review the grant of summary judgment de novo.4 Summary judgment is
appropriate only if the moving party is entitled to judgment as a matter of law.5 We
interpret the governing documents of a corporation in accordance with accepted rules of
contract interpretation.6 We give the words in a contract their plain, ordinary meaning
unless the contract as a whole clearly demonstrates a contrary intent.7 Articles of
incorporation and bylaws are "'correlated documents'" that are construed together.8
"'[S]ummary judgment is proper if the parties' written contract, viewed in light of the
parties' other objective manifestations, has only one reasonable meaning.'"9
3 Primark, Inc. v. Burien Gardens Assocs., 63 Wash. App. 900, 907, 823 P.2d 1116
(1992).
4 Keck v. Collins, 184 Wash. 2d 358, 370, 357 P.3d 1080 (2015).
5 CR 56(c).
6 Roats v. Blakelv Island Maint. Comm'n. Inc., 169 Wash. App. 263, 273-74, 279
P.3d 943 (2012).
7 4105 1st Ave. S. Invs.. LLC v. Green Depot WA Pac. Coast, LLC, 179 Wash. App.
777, 784, 321 P.3d 254, review denied, 181 Wash. 2d 1004 (2014).
8 Roats. 169 Wash. App. at 274 (quoting Rodruck v. Sand Point Maint. Comm'n, 48
Wash. 2d 565, 577, 295 P.2d 714 (1956)).
9 Go2Net, Inc. v. C I Host. Inc.. 115 Wash. App. 73, 85, 60 P.3d 1245 (2003)
(quoting Hall v. Custom Craft Fixtures, Inc.. 87 Wash. App. 1, 9, 937 P.2d 1143 (1997)).
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No. 73725-2-1 / 9
First, we consider if the Board had the authority to present Club members with
the option of voting to remove the pool. We conclude that it did.
The October 2012 motion required the establishment of a committee to identify
needed repairs, investigate costs, and submit this information to the Board. Wilbur does
not dispute that the committee performed its assigned task. Instead, Wilbur contends
the Board ignored the committee's findings and presented the Club's members with the
option to remove the pool, a choice not contemplated by the motion. He argues that
this option is inconsistent with the motion's stated objective of "having the pool open as
soon as a funding and construction schedule allow." But the October 2012 motion
governed only the actions of the committee. It did not impose any duties or constraints
on the Board. And the Club's bylaws permit the Board to present special assessments
to the members for a vote "at any time," regardless of whether they have been approved
by motion. As a matter of law, Wilbur fails to establish the invalidity of the May 2013
vote.
Corliss also asserts that the Club has the authority, pursuant to its governing
documents, to remove the pool at any time. We agree.
The articles of incorporation expressly give the Club the power to "sell, convey,
mortgage, pledge, lease, exchange, transfer and otherwise dispose of all or any part of
the property and assets."10 "Dispose of is defined as "to transfer into new hands or to
10 This language is identical to that found in RCW 24.03.035(5), which provides
that any nonprofit corporation has the power to "sell, convey, mortgage, pledge, lease,
exchange, transfer and otherwise dispose of all or any part of its property and assets."
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No. 73725-2-1/10
the control of someone else (as by selling or bargaining away)... to get rid of: throw
away: discard ... to treat or handle (something) with the result of finishing or finishing
with."11 Thus, a plain reading of the Club's governing documents demonstrates the
Club has the broad authority to remove or decommission any of its "property and
assets."
Wilbur argues that the words "property" and "assets" are general terms that do
not include the pool. Instead, Wilbur contends, the pool is an "athletic and recreational
facility" which the articles of incorporation require to be "maintained and operated." We
find this interpretation strained. First, the articles of incorporation state that the Club
may dispose of "all or any part" of the property. This phrase states that anything the
Club owns is subject to disposal. The articles of incorporation do not mention the pool
by name or specifically exempt the pool from disposal. Second, the use of the phrase
"property and assets" elsewhere in the bylaws shows an intent that these words include
the pool. For example, article III, section 7 of the bylaws, which provides that Club
membership is appurtenant to ownership of property in Admiral's Cove, states that "no
member whose membership is transferred [through sale or devise of the property] shall
be entitled to share or participate in any of the property or assets of the Club."
(Emphasis added.) This clearly indicates that if a Club member ceases to belong to the
Club, he or she loses the benefits of Club membership, including use of the swimming
pool.
11 Webster's Third New International Dictionary 654 (2002).
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No. 73725-2-1 /11
Wilbur argues that because the bylaws establish two committees devoted to
pool-related issues, this shows a strong intent to maintain and operate the pool. But the
existence of these committees does not guarantee or compel the perpetual presence of
a pool.12 For example, the bylaws also establish a Grounds and Building Committee,
which is responsible for maintenance of and improvements to the Club's grounds,
including "playfields, playground equipment, the shelter and stoves, picnic tables, flower
beds, etc." But this does not mean that the Club lacks the authority to get rid of a
broken swing set or a dilapidated picnic shelter.
We conclude that the Club's current governing documents give it the power to
remove or decommission the pool. We also conclude that the October 2012 motion did
not prohibit the Club from allowing the members to vote whether to remove the pool.
Accordingly, we reverse and remand for further proceedings consistent with this
opinion.
WE CONCUR:
-tcft^i^.
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12 We note that while Wilbur argued below that he possessed a property interest
in the pool, he expressly abandons this claim on appeal.
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