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Burien Town Square Condominium Association v. Burien Town Square Parcel 1, LLC

Court of Appeals of Washington, Division 1

May 14, 2018

BURIEN TOWN SQUARE CONDOMINIUM ASSOCIATION, a Washington non-profit corporation, Appellant,
v.
BURIEN TOWN SQUARE PARCEL 1, LLC, a Washington limited liability company; and BURIEN TOWN SQUARE, LLC, a Washington limited liability company; and JOHN DOES 1-100, Respondents.

          Leach, J.

         Burien Town Square Condominium Association (Association) sued Burien Town Square LLC and Burien Town Square Parcel 1 LLC (collectively BTS) for alleged violations of the Washington Condominium Act (WCA)[1]. The Association appeals the trial court's dismissal of those claims as barred by the statute of limitations. Because a period of declarant control tolled the statute of limitations, we reverse and remand for further proceedings consistent with this opinion.

          FACTS

         BTS developed and owned a condominium complex in Burien. BTS substantially completed its construction by May 1, 2009. BTS sold the first unit on May 19, 2009. On July 8, 2009, the city of Burien issued a certificate of occupancy for the condominium.

         In November 2009, BTS defaulted on its construction loan. The lender foreclosed. On November 2, 2010, BTS Marketing (Marketing) acquired the condominium as part of a settlement agreement. Marketing continued to sell units. It kept control of the building's operation by retaining the right to appoint the board of directors of the condominium association.

         In August 2013, the Association, which Marketing still controlled, received notice of a construction defect. The Association took no action at that time.

         In March 2014, unit owners first made up the majority of the board and gained control of the Association. On February 26, 2015, the Association notified BTS and Marketing about certain construction defects and asked for them to be fixed. On April 29, 2015, the Association filed several claims against BTS, including claims under the WCA. BTS moved for summary judgment, asserting that the statute of limitations barred the WCA claims. The trial court agreed and dismissed the WCA claims. We denied the Association's request for discretionary review. At the Association's request, the trial court dismissed the Association's remaining claims. This allowed the Association to appeal the dismissal of its WCA claims.

         STANDARD OF REVIEW

         We review a trial court's order granting summary judgment de novo.[2]Summary judgment is appropriate if, viewing the facts and reasonable inferences in the light most favorable to the nonmoving party, no genuine issues of material fact exist and the movant is entitled to judgment as a matter of law.[3]

         Because statutory interpretation presents a question of law, we also review it de novo.[4] The purpose of statutory interpretation is to determine the intent of the legislature.[5] When interpreting a statute, we first look to its plain language.[6] If a statute's language is plain, we will determine the legislature's intent from the words of the statute itself.[7]

         ANALYSIS

         Statute of Limitations

         The Association contends that the statute of limitations does not bar its claims because certain provisions in the WCA tolled the limitations period until after the Association filed its claim. We agree.

         The WCA has a four-year statute of limitations for construction defects.[8] But this statute does not bar an action for breach involving a common element of the condominium until one year after the period of declarant control ends.[9] The statute states that an action

must be commenced within four years after the cause of action accrues: PROVIDED, That the period for commencing an action for a breach accruing pursuant to subsection (2)(b) of this section shall not expire prior to one year after termination of the period of declarant control, if any, under [RCW 64.34.3O8(5)].[10]

Section (2)(b) provides that a cause of action involving a common element accrues at the latest of three dates: (1) when the first unit was conveyed to a bona fide purchaser, (2) when the common element was completed, or (3) when the common element was added.[11]

         Here, the Association's WCA claims involve the common elements of the condominium. The parties agree that BTS conveyed the first unit on May 19, 2009. They also agree that construction was complete and all common elements were added and completed by July 8, 2009, the date the city of Burien issued the certificate of occupancy. Thus, the Association's cause of action accrued no later than July 8, 2009.

         BTS contends that the statute of limitations expired in July 2013. If correct, this means that the Association's WCA claims, filed on April 29, 2015, are barred. The Association responds that the statute of limitations would have expired one year after the period of declarant control ended but was extended an additional 105 days, to June 11, 2015, by its giving written notice of its claims.

         The phrase "period of declarant control" describes the period when a condominium developer retains control over the condominium unit owners' association.[12] "'Declarant control* means the right of the declarant or persons designated by the declarant to appoint and remove officers and members of the board of directors, or to veto or approve a proposed action of the board or association."[13]

         To create a condominium, the owner, as the "declarant, ” must record a declaration with certain information, including a description of the property and information about ownership.[14] The WCA defines a declarant as

[a]ny person who is the owner of a fee interest in the real property which is subjected to the declaration at the time of the recording of an instrument pursuant to RCW 64.34.316 and who directly or through one or more affiliates is materially involved in the construction, marketing, or sale of units in the condominium created by the recording of the instrument.[15]

         Primarily, the parties dispute how long, for purposes of the statute of limitations, the period of declarant control lasted in this case. BTS asserts that the period of declarant control ended when its own control ended. The Association contends that the period of declarant control continued so long as any declarant, not just BTS, controlled the composition of the board. We agree with the Association.

         The Association relies on RCW 64.34.316.[16] The statute addresses what happens to declarant rights in a foreclosure: "[t]he declarant ceases to have any special declarant rights."[17] Whoever acquires the property succeeds to all special declarant rights.[18] It also addresses the effect of a foreclosure on the period of declarant control: "[t]he period of declarant control as described in [RCW 64.34.308(5)] terminates unless the judgment or instrument conveying title provides for transfer of all special declarant rights held by that declarant to a successor declarant.”[19] Here, after the foreclosure, BTS transferred special declarant rights to Marketing as part of the settlement with its lender. BTS does not dispute that Marketing acquired all declarant rights in the condominium. Thus, under RCW 64.34.316, the period of declarant control continued after Marketing took over as declarant.

         The statutory interpretation urged by the Association advances the strong consumer protection component of the WCA.[20] A principal purpose of the WCA is to provide protection to residential buyers of condominiums.[21] When an original declarant transfers declarant rights to a successor declarant, it remains liable for the original construction.[22] But BTS's interpretation would allow an original declarant to avoid liability by conveying property to a successor declarant and having the successor declarant keep control over the board until the statute of limitations expires. While the successor declarant might have liability for breach of its fiduciary duties owed unit owners, that remedy might provide incomplete relief for unit owners depending on a variety of variables, including the ...


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