Three Fountains Owners Association,
Plaintiff and Appellee,
Defendant and Appellant.
Case No. 971534-CA
Courts of Appeals of Utah
FILED October 1, 1998
(Not For Official Publication)
1. "Not for official publication" means this is an unpublished opinion. Prior to 2002, Utah prohibited citation of unpublished opinions and deemed them to have no precedential value. The Utah Supreme Court struck down the no citation rule, holding that all decisions of the court of appeals are binding upon lower courts and may be relied upon by parties to the extent that they “are useful, authoritative[,] and persuasive.” Grand County v. Rogers, 44 P.3d 734, 738 (Utah 2002). Utah Code of Jud. Admin R. 4-508 use to state that “Unpublished opinions, orders and judgments have no precedential value and shall not be cited or used in the courts of this state, except for purposes of applying the doctrine of the law of the case, res judicata, or collateral estoppel.” That Rule has been repealed and no longer exists.
The Court of Appeals has stopped issuing "Unpublished Decisions" as of December 31, 2010.
As of 2018, Rule 30(f) of Utah Rules of Appellate Procedure states:
(f) Citation of decisions. Published decisions of the Supreme Court and the Court of Appeals, and unpublished decisions of the Court of Appeals issued on or after October 1, 1998, may be cited as precedent in all courts of the State. Other unpublished decisions may also be cited, so long as all parties and the court are supplied with accurate copies at the time all such decisions are first cited.
2.Capital Improvements. In this case, CC&Rs required a vote of owners for capital improvements costing more than $3,000. The court, citing Bettinger v. Bettinger, noted that, "Capital improvements are 'betterments of a long lasting nature which add to the capital value of the property.'" The court stated that repairs made to the swimming pool and clubhouse "qualify as capital improvements because they replaced deteriorating parts of the structures with the effect of increasing the worth of the facilities. As they now stand, the facilities are rejuvenated and improved."
The court does not get into an analysis of its decision or relate the facts behind the decision (as it is a "memorandum decision"). The court in Bettinger defined capital improvements as improvements adding to the value of or enhancing the marketability of a home in the context of a contemplated sale or appraisal of a home. That court distinguished capital improvements from maintenance improvements, a distinction that was important in that case because the defendant did not benefit materially from maintenance improvements but did from capital improvements.
That distinction is disregarded in this case. The court in this case defined what a typical person would think was a definition of maintenance improvements, "repairs made to the swimming pool and clubhouse . . . replaced deteriorating parts of the structures with the effect of increasing the worth of the facilities. As they now stand, the facilities are rejuvenated and improved." If this definition were used in a homeowner association context, virtually every maintenance item would be a capital improvement. Because of this problem (including the lack of analysis and facts), it would be a mistake to rely on this case as any sort of precedent for defining "capital improvement" in a homeowner association context.
For HOAs, a different definition is needed, one that gives associations flexibility to address the changing needs of the community as well as changing construction materials. Thus, a capital improvement should be defined as (i) any significant new common area amenity or (ii) substantial discretionary improvement to an existing common area amenity.
Before Judges Wilkins, Billings, and Jackson.
I. The Management Committee's Action
"[A] trial court's interpretation of the words of an unambiguous, integrated contract is a question of law, which is reviewed on appeal for correctness. Whether ambiguity exists in a contract is itself a question of law." Crowther v. Carter, 767 P.2d 129, 131 (Utah Ct. App. 1989) (citations omitted).
The relevant portions of the Three Fountains Declaration of Covenants, Conditions, and Restrictions are not ambiguous. Article 6 provides that the Management Committee
shall have no authority to acquire and pay for out of the common expense fund capital additions and improvements (other than for purposes of replacing portions of the Common Area, subject to all the provisions of this Declaration) having a cost in excess of Three Thousand Dollars ($3,000.00).
(Emphasis added.) Article 8 further provides that "[t]here shall be no structural alterations, capital additions to, or capital improvements of the Common Area requiring an expenditure in excess of Three Thousand Dollars ($3,000.00) without the prior approval of Owners holding a majority of the total votes."
"Capital improvements are 'betterments of a long lasting nature which add to the capital value of the property.'" Bettinger v. Bettinger, 793 P.2d 389, 393 (Utah Ct. App. 1990) (citations omitted). Here, the repairs made to the swimming pool and clubhouse qualify as capital improvements because they replaced deteriorating parts of the structures, with the effect of increasing the worth of the facilities. As they now stand, the facilities are rejuvenated and improved. As capital improvements, the repairs (which exceed the $3,000 threshold by some $292,000) would require approval of a majority of the owners. However, Article 6 provides an exception: Capital improvements over $3,000 do not require owner approval if they are for the purpose of "replacing portions of the Common Area."
In this case, the improvements to the swimming pool and clubhouse replaced deteriorating and unsafe portions of the common areas. No new structures were built or amenities added. Rather, the unusable swimming pool and deteriorating clubhouse were refurbished and parts of them replaced by new structures. Consequently, we conclude that the improvements replaced portions of the common areas, and no owner approval was required for the Board to proceed. Accordingly, we uphold the trial court's ruling on this issue.(1)
II. Attorney Fees
We reject Leigh's contention that a proffer of attorney fees is insufficient evidence to support the trial court's award of $7,500 in attorney fees to Three Fountains. "[A]ttorney fees are routinely established by proffer or affidavit . . . ." Meadowbrook, LLC v. Flower, 959 P.2d 115, 119 (Utah 1998); see also Walther v. Walther, 709 P.2d 387, 388 (Utah 1985) (rejecting challenge to reasonableness of fees when challenger did not object to proffer or cross-examine opposing counsel). Accordingly, we affirm the trial court's award of attorney fees.
Norman H. Jackson, Judge
Michael J. Wilkins,
Associate Presiding Judge
Judith M. Billings, Judge
1. Based on our disposition of this issue, we do not address the merits of Leigh's argument that Three Fountains improperly "lumped" the special assessments and common area fees.