Anderson v. Applewood Water Ass'n, Inc

COLORADO COURT OF APPEALS
Court of Appeals No. 15CA1139
Larimer County District Court No. 15CV30234
Honorable C. Michelle Brinegar, Judge
Mark R. Anderson, Charles L. Patrick, Alberta R. Patrick, Theodore G. Rossin,
Andrea R. Mihajlov, Marcia R. Petrun, and Mark Petrun,
Petitioners-Appellants,
v.
Applewood Water Association, Inc., d/b/a Applewood Estates Homeowners
Association,
Respondant-Appellee.
ORDER REVERSED IN PART, APPEAL DISMISSED IN PART,
AND CASE REMANDED WITH DIRECTIONS
Division I
Opinion by JUDGE FREYRE
Taubman and Dailey, JJ., concur
Announced November 3, 2016
Herms & Herrera, LLC, David M. Herrera, Fort Collins, Colorado, for Plaintiffs-
Appellants
CYLG, P.C., Christopher S. Maciejewski, Christopher A. Young, Denver,
Colorado, for Defendant-Appellee
¶1 In this appeal from the trial court’s order denying a motion for
preliminary injunction, plaintiffs, Mark R. Anderson, Charles L.
Patrick, Alberta R. Patrick, Theodore G. Rossin, Andrea R. Mihajlov,
Marcia R. Petrun, and Mark Petrun (Owners), sought to enjoin the
defendant, Applewood Water Association, Inc., d/b/a Applewood
Estates Homeowners Association (Association), from performing two
acts. First, Owners sought to enjoin the Association from
conducting special meetings of the board of directors (board) in
violation of its bylaws, § 38-33.3-308(2.5), C.R.S. 2016, of the
Colorado Common Interest Ownership Act (CCIOA), and § 7-128-
203(2), C.R.S. 2016, of the Colorado Revised Nonprofit Corporations
Act (CRNCA). Second, Owners sought to enjoin the Association
from submitting the “Amended and Restated Declaration of
Covenants, Conditions and Restrictions of Applewood Estates”
(Amended Declaration) for a full membership vote based on their
belief that the Amended Declaration illegally conveyed their
property rights in the bridle path easement to the Association and
illegally expanded the scope of use of the easement without their
consent. Because, as a matter of first impression, we conclude the
trial court could enjoin the Association from holding special board
1
meetings without providing the notice required under CCIOA and
CRNCA, we reverse the trial court’s order as to that preliminary
injunction request and remand for further factual findings under
Rathke v. MacFarlane, 648 P.2d 648, 653-54 (Colo. 1982). Based
on the information provided in supplemental briefs filed by both
parties, we conclude the second injunction request is moot because
a vote on the Amended Declaration has already occurred.
Therefore, we dismiss that portion of the appeal.
I. Background
¶2 This case involves a dispute between the Association and some
individual lot owners over the board’s decision, made in special
meetings, to retain legal counsel to draft the Amended Declaration.
Owners contend that the board conducted these special meetings
without giving them the required notice and an opportunity to
provide input. They also contend that the Amended Declaration
unlawfully expands the use of the bridal path easement beyond its
original intended use without their consent. Because the relevant
facts are not disputed, we provide a brief history of the covenants
and bylaws and then summarize the hearing evidence.
A. Covenants and Bylaws
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¶3 In 1964, the Applewood Estates plat map was recorded with
the Larimer County Clerk and Recorder and stated, “All Utility &
Bridle Path Easements Are 10’ On Each Side of Property Lines
Unless Otherwise Noted.” This map identified the lots in the
subdivision that were subject to the easements.
¶4 Additionally, the Association was created as a nonprofit
corporation, and it recorded a list of protective covenants.
Covenant 9 related to easements and stated in relevant part:
Easements for installation of utilities, drainage
facilities, and bridal path(s) are served as
shown on the recorded plat.
...
The easement area shall be maintained, at all
times, by the owner of the plot appurtenant to
it, to create a safe area for horsebackriding
[sic].
¶5 Covenant 15 provided for amendments to the covenants by
two-thirds approval of the association members.
¶6 The Association also created bylaws that set forth its purpose
and rules for governance and specifically addressed special
meetings of its members and of the board.1 These bylaws required
1 Owners comprise a subset of the Association’s membership.
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thirty days’ notice to all members of regular and special meetings,
and they permitted special meetings of the board upon giving
reasonable notice to each director. The bylaws did not require
notice of special board meetings to association members.
¶7 In 1983, the Association amended the original covenants by a
two-thirds member vote and added several definitions relevant here.
The amended covenants defined “Common Area” as all real property
owned by the Association for the common use and enjoyment of the
members. It separately defined “Easements” as designated areas
used by horseback riders and hikers and for utilities. It defined
“Common Facilities” as irrigation rights managed by the
Association, easement paths designated on the recorded plats, and
roads.
¶8 The amended covenants further stated that every member had
a right to the enjoyment of the common areas, common facilities,
and easements. They continued to require that the easements be
maintained “by the owner of the plot appurtenant to it so as to
create a safe area for horseback riding” and expanded the use of the
easement to include hiking. They contained the added restriction
that “no motorized vehicles will be allowed.” The amended
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covenants also permitted future amendment by two-thirds approval
of the association members.
B. Hearing Evidence
¶9 In 2014, the board held special meetings to discuss, among
other things, further amending the covenants. Witnesses testified
that the board held these special meetings without providing notice.
They stated that they learned of these meetings from the minutes
posted thereafter.
¶ 10 Hours before the annual meeting, the board circulated a
proposed copy of the Amended Declaration, which purported to
alter the scope of the easements by expanding the activities that
could be conducted in them. A membership vote was scheduled for
June 2015.
¶ 11 The Amended Declaration contained a new provision entitled
“Names & Description of Property/Easements” (Article 2). As
relevant here, this article expanded the permissible uses of the
easement to include all nonmotorized, muscle-powered activities (in
addition to horseback riding and hiking). The Amended Declaration
continued to require members to maintain the bridle paths
appurtenant to their lots, “according to the Rules and Regulations
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set by the Board of Directors,” and continued to permit future
amendment by two-thirds membership approval.
¶ 12 Owners learned of the special board meetings before the
annual membership meeting scheduled in March 2015 and filed an
action seeking declaratory relief that the board could not hold
special meetings without proper notice, and that the easement
could not be unilaterally altered. Contemporaneously, Owners filed
the present action for a preliminary injunction. They asked the trial
court to enjoin the Association from submitting the Amended
Declaration for a vote and to enjoin the board from holding special
meetings contrary to law, pending a decision on the merits of the
case. Following a hearing, the court denied both requests.
II. Preliminary Injunction
¶ 13 Owners make two contentions. First, they contend that the
trial court erred as a matter of law when it found that it had no
legal authority to enjoin future violations of civil statutes. Second,
they contend that the court abused its discretion when it refused to
enjoin the Association from modifying the covenants and expanding
the use of the easement. We agree with their first contention and
6
conclude that a trial court may enjoin future violations of a civil
statute. We find their second contention moot.
A. Standard of Review and Applicable Law
¶ 14 We review a trial court’s decision to grant or deny preliminary
injunctive relief for an abuse of discretion. Phx. Capital, Inc. v.
Dowell, 176 P.3d 835, 840 (Colo. App. 2007). We will overturn a
trial court’s decision on a motion for a preliminary injunction if the
court made a legal error or the decision was manifestly arbitrary,
unreasonable, or unfair. Sanger v. Dennis, 148 P.3d 404, 410
(Colo. App. 2006). If only legal, rather than factual, questions are
at issue, we review the trial court’s preliminary injunction ruling de
novo. Gitlitz v. Bellock, 171 P.3d 1274, 1278 (Colo. App. 2007).
¶ 15 A preliminary injunction preserves the status quo or protects a
party’s rights pending the final determination of a cause. Id. (citing
City of Golden v. Simpson, 83 P.3d 87, 96 (Colo. 2004)). Its purpose
is to prevent irreparable harm prior to a decision on the merits of a
case. Id. In considering a motion for a preliminary injunction, the
trial court must find that the moving party has demonstrated (1) a
reasonable probability of success on the merits; (2) a danger of real,
immediate, and irreparable injury that may be prevented by
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injunctive relief; (3) lack of a plain, speedy, and adequate remedy at
law; (4) no disservice to the public interest; (5) a balance of the
equities in favor of the injunction; and (6) the injunction’s
preservation of the status quo pending a trial on the merits. Id.
(citing Rathke, 648 P.2d at 653-54). If each criterion is not met,
injunctive relief should not be granted. Gitlitz, 171 P.3d at 1278.
B. Enjoining Prospective Law Violations
¶ 16 The parties agree that the Association is governed by CCIOA
and CRNCA, both of which address special board meetings;
however, they disagree about which provisions apply. The court did
not resolve this issue or apply the Rathke factors to the issue of
special board meetings because it found, as a matter of law, that it
could not enjoin future violations of civil statutes. Because we
conclude that CCIOA and CRNCA create a legally protected interest
in open meetings and that the trial court may enjoin violations of
their provisions, we remand the case for the court to make factual
findings under Rathke and to determine whether Owners have
satisfied their burden of showing the necessity of enjoining future
special board meetings.
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¶ 17 Resolving this issue involves our interpretation of CCIOA and
CRNCA. Because a court’s primary duty is to give full effect to the
General Assembly’s intent, we begin by examining the statutes’
plain language. Bd. of Cty. Comm’rs v. Hygiene Fire Prot. Dist., 221
P.3d 1063, 1066 (Colo. 2009). We give words and phrases their
plain and ordinary meanings and, where clear, apply the statute as
written. The Triple Crown at Observatory Vill. Ass’n v. Vill. Homes of
Colo., Inc., 2013 COA 150M, ¶ 10. Where two statutes address the
same subject, we construe them together, seeking to avoid
inconsistencies and to reconcile conflicts. Hygiene Fire Prot. Dist.,
221 P.3d at 1066.
¶ 18 Our General Assembly enacted CCIOA to encourage the
establishment of homeowners’ associations. Platt v. Aspenwood
Condo. Ass’n, 214 P.3d 1060, 1064 (Colo. App. 2009). “[I]t is in the
best interests of the state and its citizens to establish a clear,
comprehensive, and uniform framework for the creation and
operation of common interest communities . . . .” § 38-33.3-
102(1)(a), C.R.S. 2016. “[T]he continuation of the economic
prosperity of Colorado is dependent upon the strengthening of
homeowner associations in common interest communities . . . .”
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§ 38-33.3-102(1)(b). Thus, “it is the policy of this state to promote
effective and efficient property management through defined
operational requirements that preserve flexibility for such
homeowner associations.” § 38-33.3-102(1)(d).
¶ 19 To this end, § 38-33.3-114(2), C.R.S. 2016, empowers courts
to enforce CCIOA’s provisions. Id. (“Any right or obligation declared
by this article is enforceable by judicial proceeding.”). Where not
inconsistent with CCIOA, courts have the power to apply
supplemental general principles of law, including the law of
corporations and the law of equity. See § 38-33.3-108, C.R.S. 2016
(CCIOA is supplemented by “[t]he principles of law and equity,
including, but not limited to, the law of corporations and
unincorporated associations, [and] the law of real property.”).
Moreover, remedies should be “liberally administered” to ensure
that an aggrieved party “is put in as good a position as if the other
party had fully performed.” § 38-33.3-114(1).
¶ 20 In addition to CCIOA, § 7-123-104(2)(a), C.R.S. 2016, of
CRNCA provides:
(2) A nonprofit corporation’s power to act may
be challenged:
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(a) In a proceeding against the nonprofit
corporation to enjoin the act. The proceeding
may be brought by a director or by a voting
member or voting members in a derivative
proceeding.
¶ 21 Although no Colorado case has interpreted these specific
statutes, we conclude that the plain language of both statutes gives
a court the authority to enjoin the violation of their provisions
where a movant can show noncompliance and harm.
¶ 22 This conclusion furthers the stated purposes of the statutes to
promote effective and efficient property management and is
consistent with cases granting injunctive relief where the loss of a
contractually negotiated right to control is at issue. See DeJean v.
Grosz, 2015 COA 74, ¶ 13 (the right to prevent a homeowners
association from engaging in contested practices during the
pendency of litigation is a proper subject of an injunction);
K9Shrink, LLC v. Ridgewood Meadows Water & Homeowners Ass’n,
278 P.3d 372, 379 (Colo. App. 2011) (injunctive relief was proper
where “neighbors were irreparably harmed by plaintiffs’ continuing
violation of the Covenant”); Gitlitz, 171 P.3d at 1280 (finding that
the loss of a contractually negotiated right to management and
11
control of an organization creates irreparable harm for injunctive
purposes).
¶ 23 Our construction is also consistent with C.R.C.P. 65(a), which
empowers courts to order injunctive relief as “a preventive and
protective remedy, affording relief against future, rather than past,
acts.” Bd. of Cty. Comm’rs v. Pfeifer, 190 Colo. 275, 279, 546 P.2d
946, 949 (1976) (emphasis added); see also RoDa Drilling Co. v.
Siegal, 552 F.3d 1203, 1210 (10th Cir. 2009) (A plaintiff must show
that the harm “is likely to occur before the district court rules on
the merits.” (quoting Greater Yellowstone Coal. v. Flowers, 321 F.3d
1250, 1260 (10th Cir. 2003))); Bd. of Cty. Comm’rs v.
Bowen/Edwards Assocs., Inc., 830 P.2d 1045, 1054 (Colo. 1992)
(Injunctive relief is appropriate when “the action complained of has
caused or has threatened to cause imminent injury to an interest
protected by law.”); Graham v. Hoyl, 157 Colo. 338, 341, 402 P.2d
604, 606 (1965) (The purpose of a preliminary injunction is to
“prevent further harm where harm is alleged.”).
¶ 24 Accordingly, we conclude that the court had the legal
authority to enjoin future violations of CCIOA and CRNCA. Because
Owners presented evidence at the hearing to support their
12
contention that the board conducted special meetings without
giving the notice set forth in CCIOA and CRNCA, and because they
also presented evidence that those meetings concerned
amendments to the existing covenants, we remand the case for the
court to make factual findings under Rathke to determine whether
Owners are entitled to injunctive relief. The court may, in its
discretion, consider additional evidence related to special board
meetings that has developed since the preliminary injunction
hearing.
C. Mootness
¶ 25 As noted, Owners initiated this litigation before the
Association had submitted the Amended Declaration for a formal
membership vote. However, that vote was scheduled to occur
before briefing deadlines. In response to this court’s order for
supplemental briefing on the status of the vote, the parties filed
responses. In their responses, they stated that the vote had
occurred, the amendments had passed by the requisite two-thirds
vote, and that amended covenants had been recorded with the
Larimer County Clerk and Recorder. Thus, the Association
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contends that all issues related to the court’s refusal to enjoin a
vote are moot. For the reasons stated below, we agree.
1. Legal Framework
¶ 26 “The duty of this court, as of every other judicial tribunal, is to
decide actual controversies by a judgment which can be carried into
effect, and not . . . to declare principles or rules of law which cannot
affect the matter in issue before it.” Tippett v. Johnson, 742 P.2d
314, 315 (Colo. 1987) (alteration in original) (quoting Barnes v. Dist.
Court, 199 Colo. 310, 312, 607 P.2d 1008, 1009 (1980)). Thus,
appellate courts ordinarily will not “render opinions on the merits of
an appeal when the issues have become moot.” Johnson v. Griffin,
240 P.3d 404, 406 (Colo. App. 2009). “An issue becomes moot
when the relief granted by the court would not have a practical
effect upon an existing controversy.” Trinidad Sch. Dist. No. 1 v.
Lopez, 963 P.2d 1095, 1102 (Colo. 1998).
¶ 27 The mootness doctrine, however, does not always bar judicial
review of moot issues. Id. Two exceptions to the mootness doctrine
permit courts to consider the merits of an otherwise moot matter:
(1) when the matter involves an issue that is capable of repetition,
yet evading review; or (2) when the matter involves a question of
14
great public importance or recurring constitutional violations.
People in Interest of Ofengand, 183 P.3d 688, 691 (Colo. App. 2008);
Gresh v. Balink, 148 P.3d 419, 422 (Colo. App. 2006).
¶ 28 Issues are capable of repetition when they could, or are likely
to, reoccur in the future. Ofengand, 183 P.3d at 692 (issue capable
of repetition because it was “likely” to reoccur); see also Tesmer v.
Colo. High Sch. Activities Ass’n, 140 P.3d 249, 252 (Colo. App. 2006)
(finding issue capable of repetition because other students “could”
make similar claims in the future). Issues “evad[e] review” when the
“time required to complete the legal process will necessarily render
each specific challenge moot.” Rocky Mountain Ass’n of Credit
Mgmt. v. Dist. Court, 193 Colo. 344, 345-46, 565 P.2d 1345, 1346
(1977) (citation omitted).
2. Analysis
¶ 29 Owners contend that the voting issue is capable of repetition
yet evading review because the board can propose amendments
through special meetings without notice and then submit those
changes for a membership vote. The Association contends any
issues related to the vote are moot because the vote has already
occurred. Neither party asserts that this issue is one of great
15
importance or involves a recurring constitutional violation; thus, we
do not address this exception. State Bd. of Chiropractic Exam’rs v.
Stjernholm, 935 P.2d 959, 971 (Colo. 1997).
¶ 30 Owners sought an injunction to prevent a vote that they
believed would lead to an unlawful result — a unilateral change in
an easement on their property. Because a vote has occurred, the
covenants now reflect the easement use changes — the underlying
issue in this case. Thus, the Association’s authority to change
easement ownership rights by a vote is not capable of repetition in
this case and can now be reviewed on the merits. While this issue
may be capable of repetition in other cases and between other
parties, the issue will not evade review because the “result” of the
vote (here the legality of the easement use change) will be the
subject of the action giving rise to the injunction request.
Accordingly, we conclude that the issue is not capable of repetition
but evading review.
¶ 31 A claim is moot when prospective relief is unnecessary to
remedy an existing controversy or prevent its reoccurrence. Id. The
vote has occurred and no uncertainty remains about whether the
Association can obtain a two-thirds majority vote to change the
16
easement. Thus, we conclude that deciding whether the district
court erred when it denied injunctive relief because the alleged
irreparable injury was speculative “would not have a practical effect
upon an existing controversy.” Trinidad, 963 P.2d at 1102. As
acknowledged by Owners, the issue of harm is now squarely before
the district court for review. Accordingly, we conclude that no
exception to the mootness doctrine applies concerning the
membership vote, and we dismiss this portion of the appeal.
III. Conclusion
¶ 32 We reverse the court’s finding that it lacked the authority to
enjoin future violations of civil statutes, and remand the case for
further factual findings. We direct the court to apply the factors set
forth in Rathke to the evidence including, in its discretion, any
additional evidence related to special board meetings that has
developed since the preliminary injunction hearing, and to
determine whether injunctive relief related to those meetings is
warranted. We dismiss the remaining claims as moot.
JUDGE TAUBMAN and JUDGE DAILEY concur.
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