The opinion
STATE OF MAINE SUPERIOR COURT
CIVIL ACTION
YORK, ss. DOCKET NOS.
AP ty Ae
oe Pos Ki Yeo Wie
ROBERT G. BLANCHARD and
DONNA M. BLAN CHARD,
Plaintiffs
V. CV-04-281
PHP PROPERTIES, IN C,, et al,
Defendants
JASCO COI CC IC IGS ICE i-ek-tok ORDER
FOX RIDGE CON DOMINIUM
ASSOCIATION and
CONSTANCE B. HUTCHINSON,
jax 24
Plaintiffs
v. CV-04-319
ROBERT BLANCHARD and
DONNA BLAN CHARD,
Defendants
This case comes before the court on PHP Properties, Inc.’s Motion for Summary
Judgment pursuant to Maine Rule 56 of Civil Procedure. In its action to recover
condominium fees, Fox Ridge Condominium Association moves to increase an
attachment against Robert and Donna Blanchard’s property, and the Blanchards move
to discharge that attachment.
FACTS
Robert and Donna Blanchard (the Blanchards) are seeking a declaratory
judgment and injunction against PHP Properties, Inc. (PHP), Fox Ridge Condominium
Association, (Fox Ridge)! and nine individuals associated with the condominium the
Blanchards own in Berwick, Maine. The Blanchards allege the condominium
association was defectively created and does not comply with state statutes and
numerous provisions of its own declaration and bylaws.’ The Blanchards also claim the
Defendants have harassed and discriminated against them in the enforcement of
regulations, and have assessed charges against them that are unauthorized or in
Blanchards with financial records, and with documentary proof of a validly created
condominium association and board. Finally, the Blanchards ask to be reimbursed for
all unauthorized fees wrongfully assessed against them, along with attorney fees.
In a separate action, Fox Ridge is bringing suit against the Blanchards for failure
to pay assessed condominium fees, and has been granted an attachment in the amount
of $500, which Fox Ridge seeks to increase, and which the Blanchards seek to remove.
association would go through a “Declarant Control Period” lasting from October 16, 1998 through either
(1) five years after the first unit was sold or (2) sixty days after 75% of all units were sold, whichever came
s
first. PHP could also voluntarily surrender control to the association’s executive board before the end of
2 Blanchards are particularly concerned with alleged violations of Provisions concerning notice,
meetings, access to financial records, budgets, and formation of an executive board.
ARGUMENT
PHP argues it is undisputed that PHP is not Properly a party to this dispute and
that summary judgment should be granted in its favor. PHP maintains that, as the
a party to an untimely formation of the condominium association, the association is
now operating and valid. Finally, PHP argues that PHP cannot be held liable for acts of
the condominium association once the association was incorporated. PHP also argues
that the corporation no longer exists?
The Blanchards argue that PHP falsely represented that a valid condominium
association existed when the Blanchards bought their unit on June 29, 2000. The
Blanchards maintain that PHP’s control over the operation of the condominium
association extends to acts and omissions wel] beyond its formation. The Blanchards
argue that declarant PHP, largely through their agent D. James McAtavey, was directly
responsible for, and actively involved in the improper operation of the condominium
association in violation of State statutes and its own declaration and bylaws during a
period that included the Blanchard’s purchase of their unit and lasted at least until June
2002.
DISCUSSION
On a motion for summary judgment, the court views the evidence in the light
most favorable to the party against whom judgment is sought, to decide “whether the
parties’ statements of material facts and the referenced record material reveal a genuine
3 PHP reports, and Blanchards accept that PHP Properties, Inc. was dissolved by the New
Hampshire Department of State on September 1, 2004.
issue of material fact." Rogers v, Jackson, 2002 ME 140, | 5, 804 A.2d 379, 380 (citations
omitted). We give the party opposing a summary judgment the benefit of any
inferences that might reasonably be drawn from the facts presented. Curtis v. Porter,
2001 ME 158, 7 9, 784 A.2d 18, 22.
it conveys any units,‘ the declarant often controls the association, including officers,
executive board members, and decisions in the first months and years of a
condominium’s existence, 33 M.RS.A. § 1603-103(d).° During this period of declarant
control, the declarant may be held liable by statute to unit owners or the association for
costs, including attorney fees, incurred by any wrongful acts or omissions of the
declarant or its agents. 33 M.R.S.A. § 1603-111. Indeed, during this time, the declarant
and its appointees to the association are held “to a higher standard of care than unit-
owner elected directors,” 8 RICHARD POWELL, POWELL ON REAL PROPERTY § 544.04
‘ 33 M.RS.A. § 1603-101 (2004). PHP may have violated this statutory requirement by
incorporating the association nine months after the date of its declaration.
5 The statute provides:
The declaration may provide for a period of declarant control of the association, during which
period a declarant, or Persons designated by him may appoint and remove the officers and members of
the executive board, Any period of declarant control extends from the date of the first conveyance of a
unit to a person other than the declarant for a period not exceeding 7 years in the case of a condominium
in which the declarant has reserved development rights, or 5 years in the case of any other condominium.
the above limits, the period of declarant contro! shal] end no earlier than the jater of: (1) Conveyance by
the declarant of 50% of the units; (2) Termination of any right of declarant to appoint officers of members
of the executive board; or (3) Termination of any right of declarant to approve or veto any actions of the
(2000)(citing 33 M.R.S.A. § 1603-103(a)). That higher standard is reflected in Maine’s
statute, providing the declarant “is a fiduciary for unit owners with respect to actions
taken or omitted at his direction by officers and members of the executive board
appointed by the declarant and acting in those capacities or elected by the members
[during the declarant control period]. 33 MRS.A. § 1603-103(a)(2004).°
Here, the Fox Ridge Declaration ( 1.2.9) expressly provides for such a
“Declarant Control Period” and incorporates Maine’s statutory limitations on the length
of time declarant control could operate before control is turned over to the unit owners.
Fox Ridge’s Declaration also provides for the transition from declarant to unit owner
control of the association, including the replacement of declarant-appointed members of
Executive Board with unit owner-elected members. (§§ 7.2.1-7.2.2).
Nonetheless, on summary judgment, declarant PHP asserts only that it presently
exercises no control over the operation, decisions or financial records of the association,
and was not involved in any of the association’s acts or omissions complained of by the
Blanchards. The affidavit of former PHP president Arthur Corte mirrors PHP’s
statements of facts asserting PHP itself did not do the acts that the Blanchards attribute
to the condominium association and its officers or board members. However, PHP
presents no factual allegations or record references that address PHP’s declarant control
over the condominium association and its officer or board members in the period
following its formation. Declarant PHP likewise does not address whether and when a
Proper transition from declarant control to unit owner control took place.
6 The basis for this very high standard in the Uniform Condominium Act is attributed to the desire
of lawmakers to hold declarant-appointed association board members “feet to the fire . . . because the
board is vested with great power over the property interests of the unit owners and because there is a
great potential for conflicts of interest between unit owners and the declarant.” 8 RICHARD POWELL,
POWELL ON REAL PROPERTY § 54A.04
PHP’s statement of fact asserts that the condominium association is presently “in
good standing;” however PHP’s record reference for that assertion is to information
provided by the Maine Secretary of State confirming that PHP was registered in 1996,
filed annual reports from 1996 through 2001 and filed no report in 2002. Such a
reference does not support the facts PHP offers concerning the good standing of the
condominium association. Levine v. R.B.K. Caly, Corp., 2001 ME 77, 9,770 A.2d 653, 656
(“A statement of material facts must directly refer the court to the specific portions of
the record from which each fact is drawn.”). Id.
The Blanchards present evidence suggesting that PHP and its agents exercised
control over the ongoing operation and decisions of the association for a period of time
extending beyond their purchase of a unit in 2000. Viewed in a light most favorable to
the Blanchards, their evidence tends to show PHP or its agents may have exercised
control over the association’s budget, regulations, access to financial records, and other
association matters during the times complained of, and may have violated statutory
requirements for that control, and the express terms of Fox Ridge’s declaration and
bylaws.
Although the dates of the Fox Ridge declaration and the association’s
incorporation are undisputed, a dispute exists concerning both the existence and extent
PHP’s declarant control, and when or if control passed from PHP to unit owners,
thereby freeing PHP of both its fiduciary duties and potential liability to the unit
owners like the Blanchards under the Maine Condominium Act statutes governing
declarant control.
Because the issue of PHP’s declarant control over the condominium association is
disputed and is material to issues of PHP’s duties and liability to the Blanchards,
summary judgment is not appropriate. However, the Blanchards continue to withhold
fees assessed by the current association in direct violation of the Fox Ridge Declaration
and bylaws the Blanchards are seeking to enforce. Therefore, attachment is allowed to
continue and be increased to $1,500.00, limited however to attachment against their
condominium unit at Fox Ridge.
ORDER
This Court DENIES PHP Properties, Inc.’s Motion for Summary Judgment.
This Court GRANTS Fox Ridge Condominium Association’s Motion to Increase
Attachment to the amount of $1,500.00, limited to their unit at Fox Ridge.
D. James McAtavey’s Motion to File a Late Answer is GRANTED.
Dated: January fx, 2005
Ye fo ee
i L be Ly
/G. Arthur Brennan
Justice, Superior Court
Robert & Donna Blanchard - R. M. A. Nadeau, Esq.
Susan B. Driscoll, Esq. - PHP Properties, Inc.
Arthur Dumas, Esq. - Fox Ridge Condominium Association, Constance B. Hutchinson,
D. James McAtavey, Chad C. Merwin, Benjamin Roberts, James Simms,
Stacy Podolec, James Cates, Joseph Knapp