Persimmon Ridge Homeowners Association, Inc. v. Peter E. Berkeley

RENDERED: JULY 14, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2022-CA-0183-MR
PERSIMMON RIDGE
HOMEOWNERS ASSOCIATION,
INC. APPELLANT
APPEAL FROM SHELBY CIRCUIT COURT
v. HONORABLE CHARLES R. HICKMAN, JUDGE
ACTION NO. 17-CI-00545
PETER E. BERKELEY; BARBARA G.
WOLFE, TRUSTEE OF THE
BARBARA G. WOLFE REVOCABLE
TRUST; CARLA MEANS; CLAUDIA
JEAN HOLLIGER; CURTIS AND
CYNTHIA RAUSCH JOINT
REVOCABLE TRUST; CURTIS G.
RAUSCH; CYNTHIA C. RAUSCH;
DAVID A. DEVINCENTIS; DAVID A.
HOLLIGER; DAVID A. NICHEOLS;
DEBORAH FOREMAN; DON E.
GOBEN, SR.; EDWIN L.
WINEBRENNER; GERALD T.
ZOELLER; JAMES E. CASEY; JAMES
MEANS; JANET M. WINEBRENNER;
JANICE A. FISCHER ZOELLER;
JANICE BUTTERS; JERRY OLLER;
JILL LAURICH-MALISON; JO ELLA
GONTERMAN; JUDY BRANDON;
JULIA KAREN WINE; KAREN
GOBEN; KARLEN DENTINGER;
KAY K. DEVINCENTIS; KEVIN B.
BRANDON; KEVIN G. MALISON;
LARRY GONTERMAN; LINDA M.
OLLER; MARILYN W. SPECK;
MARY ELLEN CASEY; MARY M.
JONES; PATRICIA A. MEREDITH;
PAUL WINTER; REBECCA ADKINS;
RICHARD ELMORE; RICK
FOREMAN; ROGER ADKINS;
ROYCE A. SPECK; RUSSELL A.
MEREDITH; SHIRLEY LITTLE
BERKELEY; SUE E. NICHEOLS;
THOMAS N. JONES; AND VICKI
ELMORE APPELLEES
AND
NO. 2022-CA-0207-MR
JANICE BLAIR; ALETHA M.
MARCUM; DALE VINIARD; JAMES
D. GARMON; JASPER BLAIR;
LAJUST, LLC; LAWREN A. JUST;
NANCY VINIARD; AND STEPHEN
H. MARCUM APPELLANTS
APPEAL FROM SHELBY CIRCUIT COURT
v. HONORABLE CHARLES R. HICKMAN, JUDGE
ACTION NO. 17-CI-00545
PERSIMMON RIDGE HOME
OWNERS ASSOCIATION, INC.;
BARBARA G. WOLFE, TRUSTEE OF
THE BARBARA G. WOLFE
REVOCABLE TRUST; CARLA
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MEANS; CLAUDIA JEAN
HOLLIGER, JR.; CURTIS AND
CYNTHIA RAUSCH JOINT
REVOCABLE TRUST; CURTIS G.
RAUSCH; CYNTHIA C. RAUSCH;
DAVID A. DEVINCENTIS; DAVID A.
HOLLIGER; DAVID A. NICHEOLS;
DEBORAH FOREMAN; DON E.
GOBEN, SR.; EDWIN L.
WINEBRENNER; GERALD T.
ZOELLER; JAMES E. CASEY; JAMES
MEANS; JANET M. WINEBRENNER;
JANICE A. FISCHER ZOELLER;
JANICE BUTTERS; JERRY OLLER;
JILL LAURICH-MALISON; JO ELLA
GONTERMAN; JUDY BRANDON;
JULIA KAREN WINE; KAREN
GOBEN; KARLEN DENTINGER;
KAY K. DEVINCENTIS; KEVIN B.
BRANDON; KEVIN G. MALISON;
LARRY GONTERMAN; LINDA M.
OLLER; MARILYN W. SPECK;
MARY ELLEN CASEY; MARY M.
JONES; PATRICIA A. MEREDITH;
PAUL WINTER; PETER E.
BERKELEY; REBECCA ADKINS;
RICHARD ELMORE; RICK
FOREMAN; ROGER L. ADKINS;
ROYCE A. SPECK; RUSSELL A.
MEREDITH; SHIRLEY LITTLE
BERKELEY; SUE E. NICHEOLS;
THOMAS N. JONES; AND VICKI
ELMORE APPELLEES
AND
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NO. 2022-CA-0226-MR
PETER E. BERKELEY; BARBARA G.
WOLFE, TRUSTEE OF THE
BARBARA G. WOLFE REVOCABLE
TRUST; CARLA MEANS; CLAUDIA
JEAN HOLLIGER, JR.; CURTIS AND
CYNTHIA RAUSCH JOINT
REVOCABLE TRUST; CURTIS G.
RAUSCH; CYNTHIA C. RAUSCH;
DAVID A. DEVINCENTIS; DAVID A.
HOLLIGER; DAVID A. NICHEOLS;
DEBORAH FOREMAN; DON E.
GOBEN, SR.; EDWIN L.
WINEBRENNER; GERALD T.
ZOELLER; JAMES E. CASEY; JAMES
MEANS; JANET M. WINEBRENNER;
JANICE A. FISCHER ZOELLER;
JANICE BUTTERS; JERRY OLLER;
JILL LAURICH-MALISON; JO ELLA
GONTERMAN; JUDY BRANDON;
JULIA KAREN WINE; KAREN
GOBEN; KARLEN DENTINGER;
KAY K. DEVINCENTIS; KEVIN B.
BRANDON; KEVIN G. MALISON;
LARRY GONTERMAN; LINDA M.
OLLER; MARILYN W. SPECK;
MARY ELLEN CASEY; MARY M.
JONES; PATRICIA A. MEREDITH;
PAUL WINTER; RICHARD ELMORE;
RICK FOREMAN; ROYCE A. SPECK;
RUSSELL A. MEREDITH; SHIRLEY
LITTLE BERKELEY; SUE E.
NICHEOLS; THOMAS N. JONES;
AND VICKI ELMORE CROSS-APPELLANTS
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CROSS-APPEAL FROM SHELBY CIRCUIT COURT
v. HONORABLE CHARLES R. HICKMAN, JUDGE
ACTION NO. 17-CI-00545
PERSIMMON RIDGE HOME
OWNERS ASSOCIATION, INC.;
ALETHA M. MARCUM; DALE
VINIARD; JAMES D. GARMON;
JANICE BLAIR; JASPER BLAIR;
LAJUST, LLC; LAWREN A. JUST;
NANCY VINIARD; REBECCA
ADKINS; ROGER L. ADKINS; AND
STEPHEN H. MARCUM CROSS-APPELLEES
OPINION
AFFIRMING IN PART, REVERSING IN PART, AND REMANDING
** ** ** ** **
BEFORE: EASTON, GOODWINE, AND TAYLOR, JUDGES.
GOODWINE, JUDGE: Persimmon Ridge Homeowners Association, Inc.
(“HOA”) and Janice Blair, et al. (“Blair”) appeal the June 1, 2021, order of the
Shelby Circuit Court. Peter E. Berkeley, et al. (“Owners”) cross-appeal. After
careful review, we affirm, in part, reverse, in part, and remand.
BACKGROUND
Persimmon Ridge is a residential subdivision in Shelby County,
Kentucky. In 1989 the developer filed the Declaration of Covenants, Conditions,
and Restrictions (“the Covenants”) with the Shelby County Clerk. Under the
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Covenants, the owners of real property in Persimmon Ridge must pay annual
assessments to the HOA. Payment of annual assessments by owners enables the
HOA to provide various benefits to members, including maintenance of common
areas, including streets, sidewalks, medians, crosswalks, landscaping, and
recreational areas, including tennis courts and the swimming pool. As HOA
members, owners are entitled to use the common areas, among other benefits.
The Covenants allow additional land to be made part of Persimmon
Ridge by mandating
Developer shall have the unilateral right, privilege and
potion, from time to time and at any time until January 1,
2010, to subject to the provisions of this Declaration all
or any portion of the Additional Land, by filing in the
Shelby County Clerk’s office an amendment annexing
such real property. Any such annexation shall be
effective upon the filing for record of such amendment
unless otherwise provided in the amendment. Developer
may assign this right of annexation to any person or
entity.
Record (“R.”) at 783. In 2003, the developer’s successor executed an amendment
annexing additional land consisting of lots 258 through 272. The amendment did
not include language altering the date on which it would be made effective. Due to
the developer’s oversight, the amendment was not timely filed. In 2004, a
construction company purchased land referred to in the amendment and
constructed a forty-two-unit condominium complex called The Villas at
Persimmon Ridge (“The Villas”). Since constructing The Villas, owners of the
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condos have paid assessments as mandated by the Covenants and have acted as
members of the HOA.1
Owners are a group of past and current owners of condos in The
Villas. Owners petitioned for a declaration that they are not obligated to pay
annual fees to the HOA and for reimbursement of all fees previously paid. The
trial court entered a joinder order requiring Owners to send all past and present
owners of The Villas party option forms. Some individuals joined the petition.
Others disclaimed any right, title, or interest to any reimbursement of assessments
or future claims for relief like what was requested by Owners.
Owners argue they were never subject to the Covenants because the
amendment annexing the land on which The Villas are built was not filed until
2015. Another group of owners, Blair, has joined the HOA’s opposition to the
petition and wishes to remain members of the HOA. Both Owners and the HOA
moved for summary judgment. After hearing the parties’ arguments, the trial court
denied the HOA’s motion and granted the Owners’ motion. The trial court held
the Petitioners are not obligated to pay an annual
assessment to the Persimmon Ridge HOA and the Villa
owners shall not be obligated to pay the annual
assessment prospectively. The Persimmon Ridge HOA
is hereby ordered to refund of all past annual assessments
1
In addition to the Persimmon Ridge assessment, condo owners are required to pay separate fees
for maintenance and insurance for the complex.
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which Villa condominium owners, past and present, have
paid to the Persimmon Ridge HOA.
R. at 1239. The court subsequently clarified that its order affected only Owners
and not “those individuals that opted out of the case, those that have waived any
refund, [or] those owners that purchased a villa after the amendment annexing real
property was filed[.]” R. at 1275. These appeals and cross-appeal followed.
STANDARD OF REVIEW
We review grants of summary judgment de novo.
When reviewing a trial court’s grant of summary
judgment, we determine whether the record supports the
trial court’s conclusion that there is no genuine issue as
to any material fact and the moving party is entitled to
judgment as a matter of law. Because summary
judgment does not require findings of fact but only an
examination of the record to determine whether material
issues of fact exist, we generally review the grant of
summary judgment without deference to the trial court’s
assessment of the record or its legal conclusions.
Foreman v. Auto Club Property-Casualty Insurance Company, 617 S.W.3d 345,
349 (Ky. 2021) (internal quotation marks and footnotes omitted).
ANALYSIS
On appeal, the HOA argues: (1) the amendment is valid and
enforceable; (2) in the alternative, the parties entered into an implied contract for
payment of the annual assessments; (3) Owners’ claims are barred by quantum
meruit and unjust enrichment; (4) Kentucky’s race-notice statute does not apply to
the amendment; (5) the trial court erred in awarding a refund to Roger and Rebecca
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Adkins; and (6) the trial court failed to enforce its joinder order. Blair raises
substantially similar arguments to those of the HOA. On cross-appeal, in addition
to arguing the trial court properly found the Covenants did not bind them, Owners
claim the trial court erred by denying them prejudgment interest.
First, determining whether the amendment is enforceable requires an
interpretation of the terms of the Covenants. The HOA takes issue with the trial
court’s citation to Oliver v. Schultz, 885 S.W.2d 699 (Ky. 1994), which pertains to
restrictive covenants. In this matter, the additional land and assessments covenants
are affirmative, not restrictive, covenants. See Your Community Bank, Inc v.
Woodlawn Springs Homeowners Association, Inc., 449 S.W.3d 357, 359 (Ky.
2014). We interpret the terms of affirmative covenants according to the well-
settled principles of contract law. Id. (citation omitted). “[I]n the absence of
ambiguity, a written instrument will be enforced strictly according to its terms, and
a court will interpret the contract’s terms by assigning language its ordinary
meaning and without resort to extrinsic evidence.” Id. at 359-60 (citation omitted).
The language of the covenant regarding additional land is
unambiguous. Under the Covenants, the annexation of additional land is not
effective until the amendment is filed with the county clerk. Despite its execution
in 2003, the amendment annexing the land encompassing The Villas was not filed
until 2015. The amendment contains no language altering the date of
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effectiveness. Therefore, The Villas were not annexed by the amendment into
Persimmon Ridge, and, as such, owners of the condos were not subject to the
Covenants.
However, the law must be “rigorously, but not mechanically,
applied.” See Bruner v. Cooper, ___ S.W.3d ___, 2022 WL 12212262, *14 (Ky.
2022) (Nickell, J., concurring). While there is no actual contract between the
parties, an implied contract exists. An implied contract is “an obligation imposed
by law because of the conduct of the parties or some special relationship between
them, or because one of them would otherwise be unjustly enriched.” Kentucky
Ass’n of Counties All Lines Fund Trust v. McClendon, 157 S.W.3d 626, 632-33
(Ky. 2005) (footnote omitted). Such a contract is not written or oral but is implied
by the parties’ conduct. Furtula v. University of Kentucky, 438 S.W.3d 303, n.6
(Ky. 2014).
[A] contract may be inferred wholly or partly from such
conduct as justifies the promisee in understanding that
the promisor intended to make a promise. To constitute
such a contract there must, of course, be a mutual assent
by the parties – a meeting of the minds – and also an
intentional manifestation of such assent.
Id. at 308 (citation omitted). “The conduct of a party is not effective as a
manifestation of his assent unless he intends to engage in the conduct and knows or
has reason to know that the other party may infer from his conduct that he assents.”
Id. at 309 (citation omitted).
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The parties agree that the developer was responsible for filing the
amendment. None of the parties confirmed that the amendment had been filed.
Instead, all parties proceeded under the assumption that The Villas were properly
made part of Persimmon Ridge and that their owners were members of the HOA.
It is undisputed that owners conducted themselves as members of the
HOA. They paid the annual assessments. They enjoyed membership benefits,
including driving on the streets, walking on the sidewalks, and using recreational
facilities. The HOA used the funds collected from Owners to maintain the
common areas and to meet its obligations under the Covenants otherwise. Both the
HOA and Owners knew or should have known the other could infer assent from
this conduct, proving mutual assent as to payment of assessments in exchange for
the benefits of HOA membership.
Owners would be unjustly enriched if their prior payments were
refunded or if they were allowed continued use of the benefits of HOA
membership without payment. Unjust enrichment requires (1) a benefit to have
been conferred upon Owners at the HOA’s expense, (2) Owners to have
appreciated the benefit, and (3) Owners to have inequitably retained the benefit.
See Lipson v. University of Louisville, 556 S.W.3d 18, 32 (Ky. App. 2018) (citation
omitted). These elements are easily satisfied. The Owners, by their conduct,
entered into an implied contract with the HOA and enjoyed the benefits of that
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contract. Refunding their payments despite their enjoyment of the benefits or
allowing continued enjoyment without payment would be inequitable.
Furthermore, Owners represent only a portion of the past and present
owners of The Villas. Other owners did not join the lawsuit and, instead, joined
the HOA’s arguments because they wish to remain members of the HOA. There
would be no equitable way to stop some but not all owners of The Villas from
enjoying the benefits of HOA membership. For example, it is difficult to imagine
Owners would not continue to use many common areas, such as the streets and
sidewalks, without contributing to their maintenance.
Because the above analysis is determinative of this appeal, we need
not address the merits of the remaining arguments raised by the parties.
CONCLUSION
Based on the foregoing, we affirm, in part, the June 1, 2021, order of
the Shelby Circuit Court to the extent that the court found the amendment
unenforceable before its recordation in 2015. Otherwise, we reverse the order and
remand with instructions to enter an order denying the Owners’ motion for
summary judgment and granting Blair and the HOA’s motions for summary
judgment because an implied contract existed between the parties and Owners
would be unjustly enriched if they were reimbursed and prospectively exempt from
assessments.
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ALL CONCUR.
BRIEFS FOR PERSIMMON RIDGE BRIEF FOR PETER E. BERKELEY,
HOMEOWNERS ASSOCIATION, ET AL.:
INC.:
Richard V. Hornung
David Domene Louisville Kentucky
Catherine Murr Young
Louisville, Kentucky BRIEF FOR ROGER AND
REBECCA ADKINS:
BRIEF FOR JANICE BLAIR, ET AL.:
Henry S. Johnson
Gregg Y. Neal Louisville, Kentucky
Shelbyville, Kentucky
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