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Point's Reach Condominium Council of Unit Owners v. Point Homeowners Association, Inc.

Court of Special Appeals of Maryland

August 30, 2013

POINT'S REACH CONDOMINIUM COUNCIL OF UNIT OWNERS, ET AL.
v.
THE POINT HOMEOWNERS ASSOCIATION, INC.

Eyler, Deborah S., Zarnoch, Matricciani, JJ.

OPINION

Eyler, Deborah S., J.

This case concerns the residential real estate development of Section 17 of Ocean Pines, in Worcester County. Section 17 is 139 acres of land more or less, some fronting on the Isle of Wight Bay. A "Planned Unit Development" known as "The Point" was built on Section 17. The Point consists of, at the very least, 124 single-family residences. In addition to these residences, the same developer built three waterfront condominium buildings known as "Point's Reach Condominium." Whether the unit owners in "Point's Reach Condominium" are required to belong to the Point's Reach Homeowners Association is the central question in this case.

In the Circuit Court for Worcester County, Point's Reach Condominium Council of Unit Owners, William and Elizabeth Iampieri, and Leonard Nemec (collectively "Point's Reach Condominium" or "the Condominium"), the appellants, sued The Point Homeowners Association, Inc. ("The Point HOA" or "the HOA"), the appellee, for declaratory and injunctive relief. They asked the court to find that the Condominium is not part of The Point and is not subject to the Declaration of Restrictions for The Point, as revised and restated in 2000; and that the Condominium unit owners therefore have no obligation to belong to The Point HOA and to pay fees (including annual dues) that the HOA assesses. They sought a permanent injunction prohibiting the HOA from assessing fees against the unit owners and also sought reimbursement of HOA dues previously paid by unit owners and attorneys' fees.

The case was tried to the court for two days, with the second day consisting of the ruling of the court. Counsel for the parties stipulated to numerous relevant documents, which were moved into evidence. The Condominium called three witnesses: Mr. Iampieri, who with his wife owns a unit in the Condominium; Brian Carney, a unit owner and the immediate past Treasurer of the Condominium's Council of Unit Owners; and Mr. Nemec, the trustee of a trust that owns one of the units. The HOA called two witnesses: David Meinhardt who, through his business entity Banker's Development, LLC ("Banker's"), developed Section 17; and John Nesbit, owner of a single-family home in The Point and President of The Point HOA.

In ruling from the bench, the court found that the Declaration of Restrictions for The Point, as revised and restated in 2000, which created the HOA and required membership in it, is not clear as to whether it covers the Condominium units. The court had admitted extrinsic evidence on that issue and, applying the equitable doctrine of implied reciprocal negative covenants, ruled that the Condominium unit owners are subject to that declaration and therefore must belong to the HOA and pay the fees it assesses. The court further found that the HOA is authorized to assess fees. Upon these findings, the court denied all relief sought by the Condominium. It entered a one-page order embodying its ruling.

Unhappy with that outcome, the Condominium noted this appeal, raising four questions for review, which we have combined, reordered, and reworded:

I. Did the trial court err in finding that the Condominium unit owners are bound by the Declaration of Restrictions, as revised and re-stated in 2000, which requires membership in the HOA?
II. Did the trial court err by failing to decide whether the HOA has the power to assess fees?
III. Did the trial court's oral declaratory judgment ruling together with its accompanying written order satisfy the requirement that the court issue a written declaration of the rights of the parties?[1]

We conclude that the 2000 Revised and Restated Declaration of Restrictions ("2000 Declaration") is clear as to its parties and the lots expressly covered, which do not include the Condominium, but also is clear that all property owners within The Point -- which includes the Condominium -- must belong to the HOA. Moreover, many of the restrictions in that declaration are, by the declaration's plain language, for the benefit of The Point as a whole, not just the lots expressly covered by the declaration. The inclusion of seemingly inconsistent provisions in this single document creates ambiguities, which leads us to conclude that the trial court properly admitted extrinsic evidence to resolve them. We further conclude that the trial court properly applied the doctrine of implied negative reciprocal covenants, and the evidence relevant to that doctrine strongly rebutted the presumption, arising from the Condominium unit owners not being parties to the 2000 Declaration or the 2000 Declaration not being later revised to include them, that the common grantor did not intend that the unit owners be required to belong to the HOA.

Finally, we conclude that the trial court in fact decided that the HOA has the power to assess fees; that that decision was legally correct; and that the trial court's procedural error in not memorializing its decision in writing, after announcing it in detail on the record, does not preclude our review of the issues, was harmless, and can be corrected on remand without reversing the judgment.

FACTS AND PROCEEDINGS

County Approval of Development of Section 17 of Ocean Pines and Later Purchase of Section 17 by Banker's[2]

On December 5, 1989, the then-owner of Section 17 of Ocean Pines obtained Step I approval from the Worcester County Commissioners for the "Isle of Wight/Turville Creek Planned Unit Development ["PUD"]" in accordance with the county's master land use plan of September 1, 1987.[3] Almost four years later, on August 19, 1993, Step II approval was obtained by a successor owner, which had changed the name of the proposed development to the "Manklin Creek PUD" and had added a portion of Section 15 of Ocean Pines to it. The plan for the Manklin Creek PUD as originally given Step II approval shows single family and multi-family residential structures, the latter to be located near the Isle of Wight Bay waterfront, where the Condominium buildings now stand.

With another transfer in ownership, the name of the development reverted to the "Isle of Wight/Turville Creek PUD" and the area of the PUD was reduced to encompass Section 17 of Ocean Pines only, as it had originally. On June 1, 1995, the Worcester County Commissioners gave Revised Step II approval for the PUD. Thereafter, ownership of Section 17 changed hands several more times. By 1997, Section 17 was owned by the Balfour Real Estate Group, d/b/a BRE/OCEAN PINES, LLC ("Balfour"). Balfour sold a few lots but did not begin construction of infrastructure or residences. Sometime in 1999, Mr. Meinhardt decided to purchase Section 17 from Balfour to develop it, and formed Banker's for that purpose.

1999 Declaration of Restrictions and Related Plats for The Point

On August 30, 1999, Banker's, through Mr. Meinhardt as signatory, finalized a document entitled,

DECLARATION OF RESTRICTIONS THE POINT SECTION 17- OCEAN PINES

("1999 Declaration"). Mr. Meinhardt drafted the 1999 Declaration using a form composed by Balfour. The 1999 Declaration was recorded in the Land Records of Worcester County ("Land Records") on September 3, 1999, together with the deed conveying Section 17 of Ocean Pines from Balfour to Banker's. The 1999 Declaration incorporated by reference a Plat, dated August 1999, and recorded in the Land Records on September 3, 1999 ("the 1999 Plat").[4] The 1999 Plat is entitled,

The Villages at Ocean Pines SECTION 17 - THE POINT - PHASE I & IA RECORD PLAT OCEAN PINES, THIRD TAX DISTRICT, WORCESTER COUNTY, MARYLAND.

The 1999 Plat depicts 90 residential lots to be developed as single family homes, 7 "outlots, " and other planning indications. Note 22 on the 1999 Plat states, "This property is part of and therefore subject to the Isle of Wight/Turville Creek Planned Unit Development. . . ."

The 1999 Plat shows "Phase I" of "The Point" as comprising some of the land south of Ocean Parkway, an east-west thoroughfare that bisects Section 17. A semi-circular area denoted "Parcel A, " and a sliver of land inside Parcel A, next to Ocean Parkway and denoted "Outlot A, " appear in the middle of Section 17, immediately south of Ocean Parkway. Parcel A, which is not part of Phase I, is labeled, "Remaining Lands of Banker's Development LLC Reserved For Future Development." Note 21 on the 1999 Plat states, "Parcel A is not being approved for building purposes at this time. This area is intended to be developed in the future as a multi-family area." Pine Forest Drive is depicted as a U-shaped road, beginning and ending on Ocean Parkway, on the boundary of Parcel A. The lots in Phase I are to the south of Pine Forest Drive.

The 1999 Plat also shows "Phase IA" of The Point, which comprises some land in Section 17 north of Ocean Parkway. The land depicted on the 1999 Plat where the Condominium buildings now are located, next to the Isle of Wight Bay, is marked "Remaining Lands of Banker's Development LLC Reserved for Future Development."

In the 1999 Declaration, a series of introductory "WHEREAS" clauses states among other things that Banker's owns "SECTION 17 – THE POINT" as depicted in the 1999 Plat; that "all of the real property described in the Plats comprises Section 17 . . . generally known as 'THE POINT' (herein called 'the Section, ' or 'The Point')"; that there are subdivided "single-family detached numbered residential lots (herein called 'the Lots') set forth and described in the Plats" that were filed or are to be filed in the Land Records; and that "Declarant is about to sell and convey the Lots; and, before doing so, It desires to subject them to and impose upon them mutual and beneficial restrictions . . . for the benefit and complement of all of the Lots in the Section and Subdivision. . . ."

In the following "NOW, THEREFORE" clause, the 1999 Declaration states that all of "the Lots" shall be sold, held, etc., subject to the restrictions that follow. Section 1, entitled "Applicability, " provides: "Restrictions shall apply to Lots only and are specifically excluded from application to other property in the Section and depicted on the Plats as roadways and open space, which are intended to be conveyed to Ocean Pines Association . . . ." (the "OPA"). The 1999 Declaration sets forth its term (section 2); states that the "Restrictions and agreements . . . are made for the mutual and reciprocal beneficial [sic] of each and every Lot in the Section and the Subdivision. . . ." (section 3); provides that the "Lots shall be used only for the purposes set forth herein, on the Plats, or as provided by" law, and subject to the provisions of the Environmental Control Committee ("ECC") of the OPA (section 4); and explains the "Philosophy of Development, " which among other things is to "establish a level of aesthetics, which will benefit the value of individual homes and properties, and therefore the entire community" (section 5).

Section 6 of the 1999 Declaration provides the procedure for design plans to be submitted for approval to Banker's and the ECC. Subsection 6.1 explains that "[t]he authority and prerogatives of the ECC provided for in this Declaration shall extend only to any Lots and shall not apply to any parcels to be developed by the Declarant for any use other than single-family detached numbered residential lots." Section 6.5, which addresses review fees for those submitting plans for approval, provides at subsection 6.5.2 that "Review fees for residential products other than single-family, or for modified dwelling designs, or for commercial uses . . . may be established from time to time by the Declarant."

Section 7, devoted to design criteria, describes the size, configuration, colors, materials, setbacks, landscaping, trees, fences, patios, decks, driveways, and other features of the single family homes planned for The Point. It also states, at Subsection 7.5:

Multi-Family. Multi-Family design standards shall be consistent with the architectural design theme and shall be subject to criteria to be established by Declarant.

Additional sections of the 1999 Declaration address the composition of and procedures before the ECC (section 8); general prohibitions and requirements (section 9); variances and fines (section 10); easements (section 11); and ownership, use, and enjoyment of streets, parks, and recreational amenities (section 12). Section 13 requires, with some exceptions, that "[e]very person who acquires title . . . to any Lot in the Section shall become a member of the OPA. . . ." Sections 14, 15, and 16 deal with other rights of the OPA and remedies it may pursue. Finally, section 17 provides among other things that grantees of "any Lot subject to the coverage of this Declaration" accept their deeds or contracts subject to the Restrictions and agreements in the document.

2000 Revised Step II Plan, Declaration, and Plats

On April 6, 2000, the Worcester County Planning Commission approved a "Revised Step II Master Plan for the Isle of Wight (Section 17) Portion of the Isle of Wight/Turville Creek PUD." The Isle of Wight Portion of the PUD is the land adjacent to the waterfront, where the Condominium buildings presently are located. The next day, Phyllis Wimbrow, Planning Administrator, wrote to Mr. Meinhardt, stating:

The purpose of this revised Step II plan was to illustrate the waterfront area as being developed with multi-family units in three three-story structures, comparable to that shown on the Step I plan approved by the County Commissioners on December 5, 1989, as opposed to single-family dwellings as was shown on the last approved Step II plan. Based upon its review, the Planning Commission approved the revised Step II master plan as presented. Copies of the approved Step II master plan are enclosed for your records. . . .

The April 7, 2006 letter from Ms. Wimbrow attaches the Revised Step II master plan, which depicts three condominium buildings in the area of Section 17 that borders the Isle of Wight Bay, where the Condominium buildings later were constructed. The Revised Step II plan lists among its "SITE DATA, "

Site area 130.32 ac. Single family Existing Section I = 1 thru 90 Proposed Section II = 91 thru 110 Proposed Section III = 111 thru 126 Multi-Family Proposed 75 units Total Density = 201

On June 1, 2000, Ms. Wimbrow again wrote to Mr. Meinhardt, stating:

This is to confirm that I have reviewed the above referenced Step II plan for the Isle of Wight (Section 17) portion of the Isle of Wight/Turville Creek P.U.D. The purpose of this revised Step II plan was to indicate minimum yard setbacks for the lots in Sections 2A and 2B. Based upon my review, I have approved the revised Step II master plan as presented.
Copies of the approved Step II plan are enclosed for your records. . . .

The attached revised Step II plan for the Isle of Wight portion of the PUD, on Section 17 of Ocean Pines, is similar to the one attached to Ms. Wimbrow's April 7, 2006 letter, with two exceptions. First, the various phases of the development are marked, showing their locations in Section 17 of Ocean Pines, and the units proposed in each. For example, the area of Section 17 comprising Phase I is marked "Phase One 66 Family Lots." The area of Section 17 that depicts the three buildings constituting the Condominium is marked "Phase Three 78 Multi-Family Units." Second, the "SITE DATA" has been changed to a total density of 202 units, and the nomenclature used to describe the units to be developed has been changed to match the nomenclature in the 1999 Plat:

Site area 130.02 ac. Single Family Existing Phase One and One-A = Lots 1 thru 90 Proposed Phase Two-A = Lots 91 thru 110 Proposed Phase Two-B = Lots 111 thru 124 Multi-Family Proposed Phase Three = 78 units Total density = 202

On December 12, 2000, Mr. Meinhardt drafted the 2000 Declaration, which is entitled,

REVISED AND RESTATED DECLARATION OF RESTRICTIONS THE POINT SECTION 17 - OCEAN PINES PHASES 1, 1A, 2A & 2B

He used the same form he had used in drafting the 1999 Declaration, and much of the same language. The 2000 Declaration was filed in the Land Records the following day, December 13, 2000.

The 2000 Declaration attaches and incorporates by reference the Phase 1 and 1A Plat, together with two additional plats ("the 2000 Plats"). The first additional plat is entitled,

RESUBDIVISION PLAT,
THE POINT, PHASE 2A
PARCEL A & OUTLOT A, THE POINT, PHASE I AND IA, SECTION 17, OCEAN PINES
THIRD TAX DISTRICT, WORCESTER COUNTY, MARYLAND[5]

This Plat shows a revised Outlot A that has been expanded to encompass most of Parcel A, and is now designated for open space with a large pond and storm water management area. It also shows that the outer U-shaped perimeter of what used to be Parcel A has been replaced by a new road -- Park Side Circle -- immediately south of which 20 single-family residential lots have been added. These lots are situated inside what used to be Parcel A, between the new Park Side Circle and the existing Pine Forest Drive. Thus, on the 2000 Plat for Phase 2A, Parcel A no longer is designated for multi-family units as it had been in the 1999 Plat, and has been replaced with what essentially is a park, a second U-shaped road, and 20 single-family home lots.

The second additional plat is entitled,

RECORD PLAT SUBDIVISION PLAT
THE POINT, PHASE 2B
SECTION 17, OCEAN PINES
THIRD TAX DISTRICT, WORCESTER COUNTY, MARYLAND[6]

This Plat depicts 14 single-family residential lots, all located east of the areas designated as Phases I, IA, and 2A, and closer to the portion of Section 17 that is adjacent to the Isle of Wight Bay. On this Plat, the land east of the termini of Phase 2B and Ocean Parkway, immediately west and adjacent to the Isle of Wight Bay, is open space marked "Remaining Lands of Developer." That is the area where the Condominium buildings later were erected. Thus, in accordance with the Revised Step II Plan for The Point, the 2000 Plats showing Phases I and IA, 2A, and 2B depict 124 single-family residence lots and no longer show a central area future phase for multi-family dwellings. That multi-family dwelling future phase was eliminated from the Plats but, as the April 6, 2000 letter from Ms. Wimbrow shows, multi-family units in The Point were to be developed in a new future phase of three three-story structures along the Isle of Wight Bay waterfront.

The opening paragraph of the 2000 Declaration states that it is being made by Banker's and Meinhardt as attorney-in-fact for all parties set forth in attached Exhibit A, to be referred to as "Lot Owners." None of the signatories to Exhibit A are Condominium unit owners.

The series of WHEREAS clauses in the 2000 Declaration sets forth the following relevant information. First, at the time of recordation, the Declarant (Banker's) owns all the real property set forth and described in the series of plats entitled "'SECTION 17 – THE POINT - PHASE 1 & 1A, ' THE POINT, PHASE 2A, ' and 'THE POINT, PHASE 2B' (herein called "the Plats"), " which are incorporated by reference.[7] Second, "all of the real property described in the Plats comprises Phase 1, 1A, 2A, & 2B of Section 17, Ocean Pines, Worcester County, Maryland, generally known as 'THE POINT' (herein called 'the Section' or 'The Point')."

The WHEREAS clauses continue as follows:
WHEREAS, there are subdivided single-family detached numbered residential Lots (herein called "the Lots") set forth and described in the Plats which Declarant intends to sell to the general public, the remaining property in the Section consisting of future phases for residential Lots which Declarant also intends to sell to the general public, as well as amenities, roadways and open space not intended to be sold to the general public; and
WHEREAS, Declarant desires to subject the Lots to and impose upon them mutual and beneficial restrictions, covenants, conditions, and charges, herein collectively referred to as "Restrictions, " under a general plan or scheme of improvement for the benefit and complement of all of the Lots in the Section and the Subdivision;
* * * *
WHEREAS, Lot Owners, by their attorney in fact, join herein for the sole purpose of subjecting their Lots to this Revised and Restated Declaration of Restrictions.

(Emphasis added.)

The WHEREAS clauses are followed by a general "NOW THEREFORE" declaration by Banker's

that all of the Lots are held and shall be held, conveyed, hypothecated or encumbered, leased, rented, used, occupied and improved subject to the following Restrictions, all of which are declared and agreed to be in furtherance of a plan for the Subdivision, and are established and agreed upon for the purpose of enhancing and protecting the value, desirability and attractiveness of the property described in the Plats and of the Subdivision as a whole. . . .

(Emphasis added.) The first paragraph, entitled "Applicability, " states that the Restrictions "shall apply to Lots only and are specifically excluded from application to other property in the Section and depicted on the Plats as roadways and open space, which are intended to be conveyed to [OPA]. . . ." (Emphasis added.) The "Limitations on Use" section provides that: "Lots shall be used only for those single-family residential or multi-family residential purposes set forth herein, on the Plats, or as provided by [law]. . . ." In Paragraph 2, the Restrictions are said to run with the land and be binding on all parties or persons claiming under them until January 1, 2011, at which time the Restrictions shall be extended for successive ten year periods, unless a document agreeing to change them is signed by a majority of the then owners "of Lots subject thereto"; is recorded; and is approved by the OPA Board of Directors.

The Restrictions and agreements set forth herein are made for the mutual and reciprocal benefit of each and every Lot in the Section and the Subdivision and are intended to create mutual, equitable servitudes upon each of the said Lots in favor of each and all of the other Lots therein; to create reciprocal rights between the respective owners of all of the other Lots therein; to create privities of contract and estate between the grantees of said Lots, their heirs, successors or assigns, and shall, as to the owners of each such Lot, their heirs, successors, or assigns operate as covenants running with the land for the benefit of each and all other Lots in the Section and Subdivision and their respective owners.

(Emphasis added.)

Homeowners Association. Every owner of property within the Section shall be required to join the Homeowners Association entitled "The Point Homeowners Association" ("the Homeowners Association"). The purpose of the Homeowners Association is to provide for the maintenance of amenities and other property within the Section that will be either: (a) utilized as amenities exclusively for the property owners and/or residents within the Section (to the exclusion of the remainder of property owners within Ocean Pines Subdivision) or; (b) for the maintenance of property designated as open spaces, entrance facilities, sidewalks, or other public areas not under single ownership which are not accepted for ownership by Ocean Pines Association, Inc. The formation of, and obligations of the members of, the Homeowners Association shall be as set forth in the provisions of Title 11B of the Real Property Article of the Annotated Code of Maryland. The provisions of the assessment structure and provisions for the collection of assessments of the Homeowners Association shall, likewise, be as set forth in Article 11B of the Real Property Article as aforesaid.

(Emphasis added.) In addition, paragraph 13A requires membership in the OPA by "[e]very person who acquires title, legal or equitable, to any ...


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