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Members of Meadow at Moody Point Homeowner's Association, Inc. v. Cheney

Supreme Court of New Hampshire

February 17, 2012

Members of The Meadow at Moody Point Homeowner's Association, Inc.
v.
Walter W. Cheney & a.

The petitioners, members of The Meadow at Moody Point Homeowner's Association, Inc. (Members), appeal the superior court order denying their motion for summary judgment and granting the cross-motion for summary judgment filed by the respondents, Walter W. Cheney and Moody Point Company (collectively, the Developer), and The Meadow at Moody Point Homeowner's Association, Inc. (the Association). We affirm in part, reverse in part and remand.

We review the trial court's rulings on summary judgment by considering the affidavits and other evidence in the light most favorable to the non-moving party. Brooks v. Trustees of Dartmouth College, 161 N.H. 685, 690 (2011). If this review does not reveal any genuine issues of material fact, i.e., facts that would affect the outcome of the litigation, and if the moving party is entitled to judgment as a matter of law, we will affirm the trial court's grant of summary judgment. Id. We review the trial court's application of law to fact de novo. Id.

There are three issues for our review in this appeal: (1) whether, pursuant to Article V, Section 2 of the 1998 Association bylaws, the directors selected by the Developer should have been removed as a matter of law in May 2005, when seventy-five percent of the then-total building space easements had been sold; (2) whether, on October 6, 2009, the Members successfully amended the bylaws when fifteen of them voted to do so; and (3) whether the trial court should have required the Developer to relinquish control of the board of directors because the Developer was in control of the board for an unreasonably long period of time. We address each issue in turn.

We first consider the meaning of Article V, Section 2 of the 1998 Association bylaws. As is the case with any contract, the interpretation of the Association's bylaws is a question of law, which we review de novo. Carleton v. Edgewood Heights Condo. Owners' Assoc., 156 N.H. 407, 408 (2007). When interpreting a written agreement, we give the language used by the parties its reasonable meaning, considering the circumstances and the context in which the agreement was negotiated, and reading the document as a whole. Id. at 408-09. Absent ambiguity, however, the parties' intent will be determined from the plain meaning of the language used in the contract. Id. at 409.

Article V, Section 2 of the bylaws provides, in pertinent part:

[U]ntil 75 percent of the total single-family and duplex building space easements within the present project have been sold, the rights, duties and functions of the Board of Directors shall, at the option of [the Developer] . . . be exercised by said [Developer] . . . . The [Developer] . . . shall have the option at any time prior to the sale of said 75 percent of the total single family and duplex building space easements, to turn over to the Association the responsibility of electing all of the members of the Board of Directors.

Pursuant to this provision, until seventy-five percent of the total building space easements "within the present project" are sold, the Developer has the option to exercise "the rights, duties and functions of the Board of Directors." This provision also allows the Developer to "turn over to the Association the responsibility of electing all of the members of the Board of Directors" at any time before the seventy-five percent threshold of sold building space easements is met. Under this provision, once the seventy-five percent threshold is met, the Developer no longer has the option to exercise the "rights, duties and functions of the Board of Directors."

Here, it is undisputed that by May 2, 2005, the Developer had sold fifteen of nineteen building space easements. Accordingly, pursuant to Article V, Section 2 of the bylaws, as of May 2, 2005, the Developer no longer had the option to exercise "the rights, duties and functions of the Board of Directors." To the extent that the trial court looked beyond May 2, 2005, to determine whether the seventy-five percent threshold had been met, it erred. Once the Developer lost its option to exercise "the rights, duties and functions of the Board of Directors, " the Developer could not, thereafter, regain that option. Accordingly, when the Developer expanded the number of building space easements from nineteen to twenty-seven or twenty-eight in October 2005, this did not change the fact that, months earlier, the Developer had lost its option to exercise "the rights, duties and functions of the Board of Directors."

Although we agree with the Members that the seventy-five percent threshold was reached in May 2005, we disagree with them that the then-current board of directors was removed "by operation of law." Election and ouster of board members are governed by Article V, Sections 4 and 6 of the Association bylaws.

We next address whether the Members successfully amended the bylaws on October 6, 2009. Article XIV of the bylaws provides that the bylaws "or any of them may be altered, amended, or repealed or new By-Laws may be adopted, only by affirmative vote of 2/3 of the members entitled to vote." The Members argue that the fifteen members who voted to amend the bylaws on October 6, 2009, constituted "2/3 of the members entitled to vote, " and, thus, that their vote amended the bylaws. The trial court found, to the contrary, that because the Developer retained the right to build nine duplexes, the fifteen-member vote was insufficient to amend the bylaws.

Article II of the bylaws concerns membership in the Association, and provides that "[e]ach and every easement owner of . . . nineteen single family home or duplex building space easement areas shall be members of the Association . . . ." Under Article II, Section I, seven of the nineteen building spaces exist on Lot 2 and twelve exist on Lot 5-1. Article II, Section I then provides:

Notwithstanding the . . . dedication of said building spaces, [the Developer] has reserved the right to declare nine (9) of the above nineteen (19) spaces for the purpose of the construction of duplex units thereon. There shall therefore be a minimum of nineteen (19) members of the Association and a maximum of twenty-eight (28) members of the Association should . . . [the Developer] elect to build the maximum of nine (9) duplex buildings. There shall be two members for each duplex building . . . . The determination as to which of said maximum of nine (9) building spaces shall be used for said duplex buildings shall be made in the sole discretion of the Developer and shall be made by unilateral declaration(s) to be recorded at the Rockingham County of Deeds.
Membership in said Association shall begin immediately upon acceptance of said deed, which shall immediately entitle the owner to all of the privileges (including ...

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