Opinion
C.A. No. 95C-05-033-WTQ.
Date Submitted: April 3, 2000.
Date Decided: August 18, 2000.
Letter Opinion and Order on: Mazzetti and PCCC's Motion to Dismiss — MOTION GRANTED as it relates to the Common Elements of the Condominium Units; Epps' Motion to Amend the Complaint — Motion DENIED; Epps' Seventh Motion to Compel-Motion Rendered MOOT.
The Court apologizes to counsel and the parties for the delay in the issuance of this Opinion. The initial Motion to Dismiss in this case was heard on February 24, 2000. On February 24, 2000, Mr. Staats filed a Motion to Amend the pleadings. That Motion was heard on March 13, 2000, and the Court reserved decision. On March 16, the Plaintiff filed his sixth and seventh Motions to Compel, (Dkt. Nos. 185 and 186). On April 3, 2000, this Judge GRANTED the sixth Motion to compel (Dkt. No. 185) and reserved decision on the Plaintiffs seventh Motion to Compel (Dkt. No. 186). The Court then deceived a flurry of correspondence from the parties concerning a variety of matters. On May 12, 2000, the Court wrote a letter to counsel continuing the May 30, 2000 trial date and staying all matters until the resolution of this Motion. Because of the ultimate outcome in this Opinion, it appears that the Plaintiffs seventh Motion to Compel is now moot.
Dear Counsel:
This is the Court's Letter Opinion and Order on Defendants Remo Mazzetti, individually and t/a First State Contractors, and also t/a First State Builders, First State Contractors, Incorporated and A. Mazzetti Sons, Incorporated's (collectively "Mazzetti") Motion to Dismiss. Defendant Park Centre Condominium Council ("PCCC"), has joined Mazzetti's Motion and adopted it as its own (Dkt. No. 172). For the reasons stated herein, the Motion is GRANTED as it relates to the common elements of the condominium units.
FACTS
This case began in 1995 when now Defendant, PCCC, brought an action against the Plaintiff, Mr. Jerre Epps, to collect unpaid condominium fees. Epps filed a counterclaim against PCCC alleging damages associated with PCCC's failure to maintain and repair Mr. Epps' condominiums. We are here dealing only with the counterclaim wherein Epps is the counterclaim Plaintiff and PCCC is the counterclaim Defendant. In addition to PCCC, Mr. Epps brought suit against various entities associated with Mr. Remo Mazzetti, asserting that those entities were also responsible for the damages caused to his condominium units. Epps' claim then and now is that the roof leaks and cracks in the floor which have not been repaired have cost him rental income.
Epps was previously ordered by this Court to pay $11,000 in back condominium fees. Park Centre Condominium Council v. Epps, Del. Super., C.A. No. 950-05-033, Quillen, J. (May 16, 1997).
Mazzetti was the original builder of the Condominium units.
The current Motion before the Court, filed some five years after the initiation of the lawsuit, is a Motion to Dismiss by Mazzetti and P0CC, claiming that the Court should dismiss them for lack of standing and jurisdiction. Basically, they argue that Epps' claims are to repair common elements of the condominium and that the Park Centre Code of Regulations ("the Regulations") mandate that any legal challenge must be in the form of an order for specific performance in a Court of equity for any damage to the common areas. On the date of the oral argument, Counsel for Epps filed a Motion for leave to amend the Complaint to add certain claims. The Motion to amend will be considered along with the Motion to Dismiss.
The moving Defendants in this Motion do not dispute that there is a claim in the Complaint that seeks $1,115.76 for wrongful appropriation by Remo Mazzetti. It is clear that this individual segment of the Complaint is not compelled by the Regulations to be heard in a Chancery action. It is equally clear, however, under the equitable cleanup doctrine, that the Court of Chancery could hear that claim concurrently with other claims. See Park Oil, Inc. v. Getty Refining and Markedng Co., Del. Supr., 407 A.2d 533, 535 (1979) (illustrating that once equity jurisdiction attaches, the Court of Chancery can deal with the entire matter).
STANDARD OF REVIEW
In evaluating a Motion to Dismiss under Superior Court Civil Rule 12(b)(6), the Court must assume all well pleaded facts in the Complaint to be true. Nix v. Sawyer, Del. Super., 466 A.2d 407, 410 (1983) (citing Laventhol, Krekstein, Horwath Horwath v. Tuckman, Del. Supr., 372 A.2d 168 (1976)). For purposes of a Motion under 12(b)(6), all allegations in the Complaint must be accepted as true. State Use of Certain-Teed Products Corp., Del. Super., 389 A.2d 777, 778 (1978). A Complaint will not be dismissed unless the Plaintiff would not be entitled to recover under any reasonably conceivable set of circumstances susceptible of proof Nix, 466 A.2d at 410 (citing Diamond State Tel. Co. v. University of Del., Del. Supr., 269 A.2d 52 (1970)). A Complaint may not be dismissed unless it is clearly without merit, which may be a matter of law or fact. Diamond State, 269 A.2d at 58.
DECISION
Epps seeks to further amend the Complaint to assert several new claims some five years after this litigation began. We are currently operating under an amended Complaint permitted by the Court on March 18, 1996. The new claims include a request for judgment under 10 Del. C. § 4751, a claim for negligence, a claim for misfeasance of contract, a claim for breach of fiduciary duty, a claim for intentional interference with existing and prospective economic relations, a claim under 6 Del. C. § 2732 for non-disclosure of information, and for a cross claim against Mazzetti to the extent of Epps' ownership interest in certain monies. Such an amendment will make sweeping changes to the scope of this lawsuit. Justice does not require a meandering remake of this lawsuit, which has already been characterized by procedural jockeying, often without direction. Furthermore, this Motion to amend the pleadings was filed nearly five years after the institution of the third party Complaint, and was also filed on the eve of the scheduled trial date of May 30, 2000. To allow such an extensive revision of the Complaint in this already protracted litigation would, in effect, require the parties to start the discovery process again. While the statutory claims may represent different claims in entirely different causes of action, they should not be joined at this late date with the pending counterclaim Complaint and the pending third party Complaint. It is time to deal wiih the case we have without further clutter. Because this amendment to the Complaint has been filed at this late stage and because Epps is attempting to assert these several new claims, the Motion for Leave to Amend is DENIED. IT IS SO ORDERED.
Because of the holding expressed herein, the Plaintiffs to Amend, even if granted, might be Motion of considerably less consequence.
The heart of the Defendants' Motion to Dismiss is that Epps has not followed the rules and procedures of the condominium regulations before he filed suit. In Delaware, condominium ownership is governed by the Delaware Unit Properties Act ("UPA"). See 25 Del. C. ¶¶ 2201-2242. Each unit of a condominium, together with its undivided interest in the common elements are, for all purposes, real property. 25 Del. C. § 2204. The UPA deals with the rights for deeds to condominium owners and the rights and duties of unit owners. Council of Unit Owners of Pilot Point v. Realty Growth Investors, Del. Ch., 436 A.2d 1268, 1277 (1981). Under the UPA, the administration of every property shall be governed by a code of regulations. 25 Del. C. § 2206. In fact, it is mandatory that the code of regulations must contain provisions dealing with the maintenance, repair and replacement of the common elements and the costs thereof. 25 Del. C. § 2208(7), see also, 25 Del. C. § 2205 (stating the maintenance and repair of the common elements of a condominium and the making of any additions or improvements thereto shall be carried out as provided in the condominium code of regulations). That means that the maintenance, repair and replacements of the common elements and the making of improvements thereto "shall be carried on only as provided in the code of regulations." 25 Del. C. § 2213 (emphasis supplied).
One of the main duties of a condominium council is the maintenance, repair and replacement of the common elements of the condominium units. 25 Del. C. § 2211(1). In Delaware, a condominium council has representational standing to sue on behalf of the unit owners when the code of regulations provides for standing. Council of Unit Owners of Sea Colony East, Phases VI, VII, IV, III v. Carl M Freeman Assoc., Del. Super., 531 A.2d 1217, 1120-21 (1987), see also, 25 Del. C. § 2212(2) (illustrating that the condominium council has such incidental powers as may be appropriate to the performance of their duties).
So, the condominium council, in this case, PCCC, has the exclusive duty to do work on, and make improvements to, the common areas. The statute also recognizes that maintenance, repair and replacement of the common elements shall be carried on only as provided in the Code of regulations. 25 Del. C. § 2213. Epps does not dispute that fact. Epps, however, argues there is nothing in the Regulations that purports to take away from the unit owner's their right to common law actions for money damages.
The Regulations in this case concerning the maintenance and repair of the common elements are quite clear. They state:
7.1.1 Limitations Against Unit Owners. Repair, maintenance, and replacementof the common elements, whether general or limited, shall be undertaken only by employees or agents of the Council at the Council's direction, unless Council fails to respond to an emergency as hereinafter provided in subparagraph 7.1.5.
7.1.5 Right of Self-help. In the event that the Council fails to maintain the project in accordance with its duties hereunder, any unit owner, occupant, or institutional first mortgagee shall have the right to compel the specific performance of the Council in a court of equity. Should the Council fail to make emergency repairs within twenty-four (24) hours of receiving notice of the need therefor, the unit owner, occupant, or institutional first mortgagee may cause the same to be made and seek reimbursement from the Council. All doubts shall be resolved by the court or arbitrator in favor of the good faith judgment and decision of the Council.
Regulations at 16-17, Dkt No. 167, Ex. B (emphasis supplied).
Thus, under the Regulations, Epps' exclusive remedy against PCCC for non-emergency, common area repairs is a suit for specific performance in the Court of Chancery.
In his first cause of action, in the amended Complaint permitted by the Court on March 18, 1996, (Dkt. No. 11), Epps seeks recovery for cracks in the foundation of the condominium units. It seems clear that cracks in the foundation of a building are part of the common area and are not solely the problem of an individual unit owner. Foundation cracks affect all of the condominium units. See generally W.M. Riddick v. Quail Harbor Condominium Ass'n, Inc., Tex. App., 7 S.W.3d 663 (1999) (showing that in a declaratory judgment action, to recover damages for a shifting foundation of a condominium, one must have joinder of the other co-owners because the foundation is a common element); Behm v. Victory Lake Unit Owners' Ass'n, Inc., Ohio App., No. C-97 1000, Hildebrandt, J. (Feb. 19, 1999) (parties did not dispute that the foundation was part of the common area of the condominium development). Thus, as part of the common area, claims concerning foundational cracks are governed, at least in part, by Section 7.1.1 of the Regulations.
Common elements of a condominium are an indivisible entity and each individual unit owner has an undivided ownership interest in the common areas. Council of Unit Owners of Sea Colony Phases III, IV and VII v. Carl M. Freeman Assoc., Inc., Del. Super., C.A. No. 86C-AU-49, 50, 51 52, Martin, J. (Apr. 28, 1989).
In his reply, Epps does not dispute that the foundational cracks are part of the common area.
The Regulations, as well as the UPA, state that it is the sole responsibility of the condominium Council to make repairs to the common elements. Regulations § 7.1.1., Dkt. No. 167, Ex. B. Under Section 7 of the Regulations, only if the Council does not respond to emergency complaints within 24 hours can an individual engage in self-help and pay for repairs. Id. at § 7.1.5. If no self-help payments are made, then an owners remedy is to seek specific performance of the repairs against PCCC in a court of equity.
Such a provision, at first glance, seems strange. One cannot confer jurisdiction on the Court of Chancery by private contract. Timmons v. Cropper, Del. Ch., 172 A.2d 757, 760 (1961). But the contract can require the procedure to support appropriate jurisdiction and this Court will certainly not assume that Chancery would decline jurisdiction. Indeed, as a facial matter, there does not appear to be an adequate remedy at law and the use of equity to enforce ownership rights held with others is certainly not unique. In short, the contract does not appear to run contrary to equity jurisdiction concepts. Because the Court of Chancery appears to me to be the sole Court that can provide relief in this factual scenario, this Court does not have jurisdiction to hear most of Mr. Epps' claims.
Jurisdiction under the Regulations, however, is not limited to an action by the individual against PCCC in the Court of Chancery. Instead, Epps could have gained the right to sue on behalf of PCCC for money damages if he had requested the right to sue under Section 11 of the Regulations. Section 11 states in part that:
11.1.3 Waiver by Council. Council shall within seven (7) days after being requested to sue or defend by any unit owner, either consent to such request in writing or else waive the exclusive right to sue or defend in writing; except that said seven (7) day period may be extended to fourteen (14) days if Council desires to and does call a meeting of the unit owners to consider such request. Upon waiver of Council of its exclusive right to sue or defend with respect to any particular situation, any unit owner may proceed, alone or with others, to sue or defend on his own or their own behalf.
Regulations at 29, Dkt No. 167, Ex. B (emphasis supplied).
This provision clearly illustrates that in order to sue for money damages under the Regulations, the demand of a right to sue is a condition precedent to an individual unit owner suing for money damages against the builder or third party on behalf of PCCC. Without a demand to sue, PCCC had exclusive jurisdiction to cause repair of the common elements and seek redress for any building defects. The provision in this particular Regulation is somewhat analogous to the demand requirement in corporate law. If the request to sue was not made, then Epps' exclusive remedy rested with a specific performance action in the Court of Chancery. This is not a case of conferring jurisdiction on the Court of Chancery by contract; rather it is a case of the statutorily authorized Regulations limiting how a unit owner can proceed under the procedures contained in the Regulations.
In this case, it is clear that Epps never invoked this provision prior to the original suit by PCCC to collect condominium fees. Mr. Epps never invoked this provision before he filed a counterclaim for damages against Mazzetti and PCCC itself. Epps never made a demand before a third party Complaint was filed. In fact, Epps did not send his notification of suit to PCCC until August 18, 1999, nearly five years after the initiation of the original lawsuit by PCCC. Such a demand, sent so late in the process, after years of litigation, cannot give Mr. Epps the right to sue on behalf of PCCC. Epps had to file the "request to sue" before he filed suit, (or filed a counterclaim for damages or filed a third party Complaint), in order to give the Council a chance to respond and take action on its own. He never did so. Therefore, he does not have standing to sue on behalf of PCCC. Absent strict adherence to the request to sue provisions of Section 11 of the Regulations, Mr. Epps' only right to sue was in a Court of equity for specific performance for repairs under Section 7.
From a public policy standpoint, the legislature has made it clear that the Council is the sole body who can made repairs to the common elements. Epps cannot step into the shoes of PCCC and ignore that both the UPA and the Regulations mandate that PCCC has to make repairs to the common elements. It is best if the unit owners have their interests represented by the Council rather than having individual suits because the unit owners have an undivided ownership interest in the common elements. 25 Del. C. § 2204. Epps cannot make the "request to sue" this late in the process and expect it to apply retroactively so that he can sue on behalf of PCCC for money damages for structural defects caused by third parties. Under the Regulations, the unit owner may not sue or defend until there has been waiver by the Council of that right. Park Centre Code of Regulations at 29, Dkt No. 167, Ex. B. Here, there was no "waiver" until years after the third party Complaint was filed by Mr. Epps and he missed his opportunity to get waiver by the Council.
Epps argues that he and Mazzetti "reached an agreement whereby Mr. Mazzetti or First State Builders would repair the structural cracks in the foundation." Compl. at ¶ 5 (emphasis in original). Epps contends that neither Mazzetti nor PCCC ever fixed the problems. There is, however, no allegation that Epps paid any additional money to Mazzetti or PCCC to repair the cracks. The only damage alleged by Epps is that he could not sub-lease his two rental units. Under the Regulations, it appears that Epps may have had a right to self-help in this situation but he never alleges that he individually paid for any of the repairs. Because Epps had not engaged in self-help by making emergency expenditures on the property, his remedy under Section 7 of the Regulations would be to sue for specific performance in a Court of equity. Epps can not seek money damages and this Court does not have jurisdiction to hear his specific performance claims as to the common area claims. Thus, Epps' only right to sue concerning common area defects is in the Court of Chancery for specific performance.
Because of the above discussion, Epps' second cause of action also fails in part. Epps' second cause of action states that Mazzetti has, at various times, charged PCCC for repairs that were never made or were made improperly. Epps argues that subsequent repairs by other contractors have proved to be inadequate because of structural defects in the roof caused by Mazzetti. Epps asserts that his units have, and continues to suffer, damage. Again, structural defects that cause damage to the roof, like foundational cracks, are part of the common area and, thus, are governed by the Regulations. See Shelby v. The Arizona Registrar of Contractors, Ariz. Supr., 834 P.2d 818, 821 (1992) ("These roofs are, of course, common elements of the condominium complex"). The Regulations limit Epps' cause of action. Epps should have sued PCCC in the Court of Chancery for specific performance or followed the procedures of the Regulations for suit under Section 11 in order to sue on behalf of PCCC.
The Court of Chancery has jurisdiction to hear actions for continuing trespass. See Chesapeake Utilities Corp. v. Ernest Rancho Contracting Co., Del. Ch., Civ. 4. No. 606, Marvel, C. (Sept. 29, 1978). Where the structure is causing the problems and the damage is continuing, a continuing trespass action for relief in equity, hopefully permanent, can be brought to alleviate the ongoing damage. Damage at law in the continuing trespass situation is historically temporary relief for a given time period.
Epps' third cause of action claims that Mazzetti was the majority owner of the condominium and, as such, caused inadequate repairs to be made to the roof Epps also argues Mazzetti, as the majority owner, prevented adequate repair to the structural steel that he inadequately installed in the first place. Epps argues that Mazzetti used his majority status to steer work to his own company. Epps states that the work was done inadequately and that Mazzetti caused the Council to ignore unsafe conditions. Again, the roof must be considered a common element of Park Centre. Under the Regulations, Epps' could have sued PCCC for specific performance in the Court of equity if PCCC did not act to make the repairs. Epps could have made a formal "request to sue" before he counterclaimed for damages against PCCC and Mazzetti. Even though Epps asserts that Mazzetti controlled the Council, he was not without a remedy. Thus, because Epps was bound by the Regulations, he cannot assert recovery against PCCC or Mazzetti in this Court for money damages for repairs to which he alleges he is entitled.
As stated earlier in this Letter Opinion, the Regulations have no applicability as to Epps' claim that Mazzetti wrongfully appropriated condominium council fees.
An association is generally responsible for the maintenance, repair and replacement of the common elements, while owners are responsible for the replacement of their own condominium units. See Patrick Rohan Melvin Reskin, Condominium Law and Practice, § 45.03[3][a]. It seems clear from the record here that any claim for lost rent is inextricably related to claimed common area injury. Mr. Epps claims that as a result of structural problems, he was unable to sublease his two units. Compl. ¶ 7. The lost rental income alleged stems from water problems from the leaks in the roof and the cracks in the floor. Because the Complaint seeks lost rental value that was purportedly caused by the defective common elements of the building, he cannot assert a claim for lost rental value to his own unit without following the provisions in the Regulations.
There are really two separate claims at issue here. First, there is Mr. Epps' claim against the PCCC for not fixing the common elements. The Regulations mandate that Mr. Epps' exclusive remedy against PCCC, in a non-emergency self help situation, is to seek specific performance in a court of equity. Thus, this Court, because of the Regulations, does not have jurisdiction to hear Epps' claim against PCCC. Second, Mr. Epps' claim against the Defendants, (other than PCCC), is, in essence, on behalf of the PCCC for inadequate repair and maintenance of the common elements. As stated supra, this claim cannot be asserted for the PCCC without making a demand for failure to file suit. Epps has no standing. Simply, Mr. Epps cannot sue on behalf of PCCC without the request to sue being given prior to the suit being filed. Therefore, it seems doubtful that the second claim, on behalf of PCCC, can be brought in Chancery.
While the Court must follow the mandate of the statutory and regulatory scheme setup by the UPA and the Code of Regulations, the Court sees no reason why Epps does not have a claim for recovery for physical damages that were sustained to his individual units for fixtures and chattels contained therein. In his Amended Complaint, permitted by the Court on March 18, 1996, (Dkt. No. 11), he asserts a claim for water damage to his apartment. Compl. ¶ 8(c). The Defendants argue that the claims for water damage should have been made under Epps' insurance policy. While that may be the case, the Court does not have sufficient information at this time to grant Summary Judgment on those grounds as to any physical damages sustained to Epps' units or their contents. They are not part of the common areas governed by the Regulations. See Patrick Rohan Melvin Reskin, Condominium Law and Practice, § 1.03 [1][a] (illustrating that one's unit constitutes fee simple ownership of the unit within the property). Therefore, damage to Mr. Epps' fee simple ownership interest can be sued for at law. Indeed, if the trespass is continuing, it could be that Epps could probably sue repeatedly in a court of law for periodic money damages. Compare, Boomer v. Atlantic Cement, N.Y. Ct. App., 257 N.E.2d 870 (1970).
Epps briefly argues that he is entitled to a trial by jury by the Delaware Constitution. and any action in the Court of Chancery would deprive him of that right. Epps, however, misconstrues the issue. The issue is a threshold one of standing and jurisdiction. The right to a jury trial, to the extent it exists, belongs to PCCC. A shareholder cannot bring an individual suit at law to enforce the contract claim of the corporation. So it is here. Because this Court has determined that Epps' appropriate remedy to obtain repair of the common elements was an action for specific performance in the Court of Chancery, this claim must fail. See Park Oil, Inc., 407 A.2d at 535 ("The right to a jury trial, however, applies to an action at law; it does not apply in an equity suit").
It is unfortunate that the current Motion to Dismiss has taken five years to come before this Court. The matter is even more unfortunate if one foresees the possibility of a laches defense in Chancery. The Court is not particularly happy with its own performance in the matter and the Defendants have been slow with reaction. We have all contributed to the inexcusable delay. But the prime responsibility has to rest with Mr. Epps. His condominium contract rights, while intricate, seem clear and not difficult once the scheme is appreciated. The policy of the legislature is also clear. The administration of every property shall be governed by a code of regulations. 25 Del. C. § 2206. Also, the maintenance, repair and replacement of the common elements shall be carried on only as provided in the code of regulations. 25 Del. C. § 2213. This Court, and the litigants appearing before this Court are legally bound by the terms of the statute and regulations, and the terms and conditions therein must be followed.
CONCLUSION
For the foregoing reasons, Mazzetti and PCCC's Motion to Dismiss the claims against them, in Causes of Action (Counts) I, II and III, as they relate to the common elements of the condominium complex, is GRANTED, and Counts I and III are DISMISSED. Count II is also DISMISSED except as to the claim for physical water damage to the individual units and their contents. Since the dismissal relates to matters of standing and jurisdiction, the dismissal is without prejudice, not operating as an adjudication on the merits. IT IS SO ORDERED. There remains in this Court only Count IV, (a claim for wrongful appropriation by Remo Mazzetti), and the permitted portion of the March 18, 1996 amended Complaint for physical damage to Mr. Epps' units and their contents. What remains appears relatively minor and, if transfer to Chancery is contemplated, perhaps Plaintiff will want try to transfer the whole case against PCCC under equitable clean-up concepts. If so, what remains here could be stayed in this Court's discretion.
In light of this Opinion, it seems premature to consider any further judicial assignment of this case after this Judge's retirement. The Court therefore declines to act on the pending request in Mr. Staats' letter dated August 15, 2000, without prejudice to further application by any party.