By Class Counsel: Matt Davis and David Andersson
Now that we have a final trial Judgment it is timely to summarize where we are today. We succeeded on our primary objective of eliminating the Sixth and Seventh Amendments. It would be easy to think of this as a fight over a small thing, but even small things add up over time. Across the 614 Homestead properties, the $57 increase in the maintenance fee totaled $34,998 per month or $419.976 per year. And that amount would continue or grow over time. From January 2020, through to the trial judgment in this case, the amount charged under the Seventh Amendment totaled more than $1.85 million. Judge Freeman’s decision is a big win for us.
Judge Freeman entered a supplemental order on October 4, 2024 denying both motions for reconsideration and elaborating on a few issues. Together with his original decision, he made the following decisions:
- The Sixth and Seventh Amendments are void. First and most importantly, Judge Freeman ruled that “Because the manager was to act as a fiduciary, the contract did not expressly assign to MJ Management the authority to modify the Master Declaration, and the bind 30(b)(6) testimony of 18 Paradise, the Court concludes that MJ Management was without authority when it entered the Sixth and Seventh Amendments. As such, those amendments were void ab initio.” The term “ab initio” is Latin for from the beginning. That means that they were never effective.
- Judge Freeman did not say what happens next. Unfortunately, Judge Freeman did not say anything about how his order will be implemented. As a legal and logical matter, since the Sixth and Seventh Amendments are void, any amounts paid under them must be returned. However, Judge Freeman did not order the return of the payments, and it likely will require further action on our part to clear that up. There is also approximately $80,000 paid into the Court registry from people who sold their homes while the case is pending. We will seek a Court order to repay those funds to those former homeowners. Fortunately, our claim was based on the Declaratory Judgment Act, and it has a provision for courts to implement their decisions. RCW 7.24.080 states that “Further relief based on a declaratory judgment or decree may be granted whenever necessary or proper. The application therefor shall be by petition to a court having jurisdiction to grant the relief.” We have no choice but to go back to Freeman and ask him for an order compelling the repayment of the amounts paid and stating how they will be handled.
- Freeman said that a homeowner association is required but left questions. Judge Freeman also ordered that “Lynden’s PRD ordinance and RCW 64.90 require a homeowner association to be established in all common ownership communities, which includes Homestead. It is not before the Court to opine further on how to establish a homeowner association here.” Once again, Freeman did not finish his job, and we will have to go back with a petition for implementation. Freeman’s order suggests that the association can be “advisory,” but the ordinance states that “To preserve community facilities and open space, every PRD shall have a homeowner’s association and agreements to fund such an organization.” An “advisory” association would not satisfy the ordinance, and we will have to go back to Freeman for clarification.
- Judge Freeman ruled that the maintenance fee is not limited to maintenance. Judge Freeman agreed with 18 Paradise and ruled that “The Joint 23 Maintenance Fee is restricted only by the timing and increase restrictions set forth in Section 3.5(e) and (f), and the use of the Joint Maintenance Fee is not restricted to only Maintenance of the Common Open Space or any in any other manner.” Under his ruling, the declarant can continue to charge the maintenance fee and use it as it pleases. That would also allow annual 5% increases forever. Changing that would require an appeal.
- Judge Freeman dismissed MJ Management’s Declaratory claim. After Judge Freeman dismissed MJ management’s monetary claim the first day of trial, he allowed it to assert a claim for declaratory relief. The claim filed that day alleges that the maintenance fee is $93. Judge Freeman denied that claim, and MJ Management lost. That ruling may help streamline the case going forward, but it is not very significant to class members.
- Judge Freeman denied our claim about properties subject to the Declaration “without prejudice.” The Declaration applies only to platted properties, and some properties that are charged the maintenance fee were never platted. Judge Freeman just refused to address that claim even though it was pled since 2021. That question could be part of an appeal or could be raised by affected homeowners in a separate lawsuit. The dismissal “without prejudice” means that it can be brought again.
- Attorney Fees have not been decided. Both sides are seeking awards of attorney fees. That question should be resolved in the coming weeks.
- The deadline to file an appeal is November 4, 2024. That is a hard deadline.