Watz & Miller v. Tanager Estates HOA, No. 31582-7-III (WA Court of Appeals, Division Three)(08/19/14), is a two-fold story. First, it is a reminder to owners of the need to obtain pre-approval in writing before they commence construction. Second, it is a reminder to HOA’s to follow procedures.
A quick summary of the facts show the disaster in the making. Owner resided in the Tanager Estates PUD. Owner began construction without seeking HOA permission. Owner was then notified by the HOA’s VP, and chair of its Architectural Committee (ACC) that the CCR’s required Owner to obtain pre-approval of the ACC. In response, Owner submitted plans for a storage shed, shop and single story garage addition. These plans were approved by the ACC.
Owners began construction on the garage, however the garage addition under construction did not conform to the plans submitted to the ACC. Rather than constructing a single story addition with a hip roof (roof where all sides slope downwards to the walls, usually with a gentle slope), Owner had increased the height of the garage to include a full second story bonus room.
VP noted the discrepancy and initially advised Owner of the deviation from the approved plans and possible code violation, but subsequently advised Owner that the deviation probably complied with code and then incorrectly advised that the code would override the CCR’s. Owner then resumed construction and submitted a revised plan to the ACC. The HOA Executive Board’s President intervened and issued a stop work order prior to the ACC taking action on the revised submission. Subsequently, the ACC denied the revised plan.
In its denial, the ACC noted that the proposed garage addition was too tall and not harmonious with the community. The formal denial contained suggested remedies which included reducing the height of the garage.
Owners submitted another revised plan, depicting much the same design, which was again denied for much the same reasons. In the denial, the ACC again suggested reducing the height. VP delivered the latest denial and also showed Owners a paper with four designs VP had drawn up as possible alternatives, and asked Owner to select the preferred design. VP then submitted the plan to the ACC. VP then emailed several alternative designs to the ACC, leading two members of the ACC to respond stating that they were confused by the multiple emails and competing plans. VP responded that he would hold the ACC vote by email.
The HOA’s President again intervened, sending VP the following email “All current votes are null and void as the [ACC] has not been provided a complete set of plans to evaluate. An [ACC] member has requested a meeting. As you are not willing to schedule one, I will. You will not send out a denial or approval on this plan. I will be contacting the [ACC] and Owner.”
VP resigned and President, without first obtaining Board approval, asked a member of the community to take over the VP/ACC chair position.
President then met with Owner, advised Owner of VP’s resignation, and requested that Owner submit a new plan.
Owner then submitted a plan to President, which again depicted the height of the garage in excess of the house. The ACC met, no minutes were taken, and punted the question to the HOA’s Board. President notified Owner that the plan was denied and explained what modification were necessary. Owner then submitted yet another plan under protest, which plan was approved by the HOA Board.
The project was completed and a little over two years later, Owner sued the HOA and most individual members of its Board alleging violation of fiduciary duties.
The court opinion goes into some highly technical legal analysis over Owner’s right to a jury, and other principles, but what is of interest to HOA’s is that the Court of Appeals held that individual HOA Board members may be sued for negligence in how they carry out their duties. Specifically, a Board member must act “in good faith” and “with such care, including reasonable inquiry, as an ordinarily prudent person in like position would use under similar circumstances.” Because the trial court had used a different standard, which would have made it very difficult to find liability, the Court of Appeals sent the case back down to the trial court for a new look to see if the individual Board Members had been negligent in the way that they acted.
The closing of the opinion is a great summary of the lessons to be learned – “[t]here is plenty of blame to go around for both parties. [Owner] acted precipitously in starting construction on changed plans without first seeking approval. The Board, or some of its members, appeared to have also acted without regard for the proper procedures owed [Owner].”
This blog post is offered for general information and educational purposes only. It is not offered as legal advice and does not constitute legal advice or opinion. Although I intend to keep this information current, I do not promise or guarantee that the information is correct, complete, or up-to date. You should not act or reply upon the information in this post without seeking the advice of an attorney.