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Grand Arcade, Ltd. v. Grand Arcade Condominium Owners' Association, Inc.

Court of Appeals of Ohio, Eighth District, Cuyahoga

May 11, 2017

GRAND ARCADE, LTD., PLAINTIFF-APPELLANT
v.
GRAND ARCADE CONDOMINIUM OWNERS' ASSOCIATION, INC., DEFENDANT-APPELLEE

         Civil Appeal from the Cuyahoga County Court of Common Pleas Case No. CV-14-833375.

          ATTORNEYS FOR APPELLANT Michael D. Linn Thomas Owen Powers Friedman Linn, P.L.L.

          ATTORNEYS FOR APPELLEE Robert E. Kmiecik Joseph E. DiBaggio Kaman & Cusimano, L.L.C. Continental Management Co., pro se C/O Stat. Agt. John G. Moir

          BEFORE: E.T. Gallagher, J., Kilbane, P.J., and Stewart, J.

          JOURNAL ENTRY AND OPINION

          EILEEN T. GALLAGHER, JUDGE

         {¶1} Plaintiff-appellant, Grand Arcade, Ltd. ("Appellant"), appeals an order granting summary judgment in favor of defendant-appellee, Grand Arcade Condominium Owners' Association, Inc. ("the Association"). Appellant raises three assignments of error:

1. The trial court erred in granting appellee's motion for summary judgment on the issue of whether the Condominium Documents required a commercial owner to pay a proportionate share of the cost associated with the installation of windows for the residential units.
2. The trial court erred in granting appellee's motion for summary judgment when the appellant raised a genuine issue of fact regarding the calculation of the assessment.
3. The trial court erred by issuing an order declaring that the appellant was responsible for the special assessment when the appellee did not file a counterclaim or otherwise seek affirmative relief from the court.

         {¶2} We find no merit to the appeal and affirm the trial court's judgment.

         I. Facts and Procedural History

         {¶3} The Association is a corporate entity created for the purpose of managing 99 condominium units in the Grand Arcade, Warning Block, Klein-Marks, and Blair Block buildings. The buildings, which are located on St. Clair Avenue in Cleveland, Ohio, were built in the 1880s. Appellant is a member of the Association by virtue of its ownership of five condominium units in the Grand Arcade building. In 2006, the Association entered into a contract with Continental Management Company ("Continental") to act as the Association's agent in performing management functions under the direction of the Association's board of directors ("the Board").

         {¶4} In 2012, the Association determined that the windows and exterior masonry on Grand Arcade, Warning Block, Klein-Marks, and Blair Block buildings were in need of repairs. In an effort to prioritize spending, the Association obtained an engineering report that identified the areas in greatest need of repair, including the removal and replacement of existing window frames, trim work, glass, sash, screens, caulking, and sealing work throughout all four buildings. This case involves a dispute as to whether Appellant is responsible for a percentage of the assessment levied against Association members to pay for the expansive window replacement project ("the project").

         {¶5} In January 2013, the Association, through the Board, determined that each member would pay a proportionate share of the cost for all "Common Element"[1]expenses, such as brick masonry, window frames, and the removal and replacement of window frames according to each member's percentage of ownership in the buildings. Individual unit owners would be responsible for the labor and material cost to replace the glass and sash on their own windows, if they had to be replaced. Appellant did not have any windows that needed to be replaced.

         {¶6} In August 2013, the Association held a special meeting of the membership at which the Board approved the project. The Board informed members that individual unit owners were responsible for the cost to replace the glass and sash in their own windows. The Board estimated the project would cost between $1.3 and $1.7 million dollars and informed members that it would either levy a special assessment to members and/or secure financing to pay for the project. Either way, members would be charged their proportionate share of the cost.

         {¶7} In October 2013, the Association received bids from three construction companies and awarded the bid to Miceli Glass, Inc. ("Miceli Glass") because its bid of $1, 622, 862 was the lowest and best bid. The Board voted to proceed with a special assessment for the project that would begin in January 2014 and run through September 2014. Members of the Association subsequently voted to allow the Association to obtain a loan to finance the project.

         {¶8} The Association calculated the total cost per square foot for all windows based on Miceli Glass's bid. The total cost for the project was $167 per square foot, which was determined based on the total cost of the project divided by the total square footage of the affected windows. At the Association's request, Miceli Glass informed the Association that the price per square foot for the glass and sash portion of the windows to be installed was $60 per square foot. Accordingly, the Board determined that the Common Element expense for the window replacement project was $107 per square foot.

         {¶9} In August 2014, the Board sent a letter to all condominium owners to discuss its decision to move forward with the window replacement project, the cost of the project, and the payment options available to owners. Owners could either pay their respective shares in advance interest free, if paid by September 3, 2014, or through a loan that required monthly payments with interest over a 15-year term. Scott Sauter, Continental's chief operating officer, subsequently sent an email to Appellant's representative, Michael Carney ("Carney"), to clarify the cost allocation of the project. The email contained two spreadsheets that indicated Appellant would only be charged for the Common Element cost of the project, which was $107 per square foot.

         {¶10} The project proceeded as planned, and Appellant did not make the advance payment for its share of project. By default, Appellant was subsequently placed on the 15-year loan repayment plan. Appellant was assessed a total of $108, 000 based on its percentage of ownership in the buildings.

         {¶11} In September 2014, Appellant filed a complaint against the Association and Continental seeking an order (1) declaring that it was "not responsible for paying any part of the assessed costs or expenses relating to the residential unit window project, " (2) enjoining the Association and Continental "from assessing to and demanding from [Appellant] a percentage of the costs and expenses relating to the residential unit window project, " and (3) awarding money damages resulting from the Association and Continental's alleged negligence. (Complaint ¶ 9-17.) Appellant further alleged that the Association and Continental negligently caused the deterioration of the windows and that the stated cost of the repair work was "grossly overstated."

         {¶12} The parties filed competing motions for summary judgment. Appellant argued that because it owned commercial units, it was not responsible for any portion of the repair costs, which were limited to either residential "Units" or residential "Limited Common Elements." The Association, however, argued that based on the definitions of "Common Elements" and "Units" in the Association's Declaration and Bylaws, Appellant was responsible for its proportionate share of the project regardless of the fact that it owned commercial units.

         {¶13} A magistrate determined that Appellant was responsible for the full amount of the assessment levied against it for the project. The magistrate concluded that, based on the unambiguous language in the Association's Declaration and Bylaws, "window frames" and associated costs were "Common Elements" of the property as opposed to "Limited Common Elements." The magistrate further determined that Appellant was responsible for its share of the cost to repair the "Common Elements."

         {¶14} Appellant filed timely objections. In a journal entry adopting the magistrate's decision, the trial court explained, in relevant part:

The court finds and declares that the window frames are a Common Element in the Declaration and Bylaws. The court further finds that and declares that "window frames" are not listed as a Common Element or in the description of a Unit and must, therefore, be a Common Element by virtue of the express terms of the agreement. The court further finds and declares that plaintiff, as a unit owner, is therefore responsible for the proportional assessment for the costs of window frames and window frame installation.

         Accordingly, the trial court granted summary judgment in favor of the Association and denied Appellant's motion for summary judgment. Appellant now appeals the trial court's judgment.

         II. Law and Analysis

         A. "Common Elements"

         {¶15} In the first assignment of error, Appellant argues the trial court erred in finding that the condominium documents, i.e., the Association's "Declaration and Bylaws, " required a commercial owner to pay a proportionate share of the project. Appellant contends the trial court misinterpreted the contractual obligations embodied in the Association's Declaration and Bylaws.

         {¶16} Condominium declarations and bylaws are contracts between the association and the purchaser and are subject to the traditional rules of contract interpretation. Nottingdale Homeowners' Assn., Inc. v. Darby, 33 Ohio St.3d 32, 35-36, 514 N.E.2d 702 (1987). A contract that is clear and unambiguous requires no real interpretation or construction and will be given the effect called for by the plain language of the contract. Aultman Hosp. Assn. v. Community Mut. Ins. Co., 46 Ohio St.3d 51, 55, 544 N.E.2d 920 (1989).

         {¶17} Where a contract's terms are clear and unambiguous, its interpretation is as a matter of law, not fact, and may be adjudicated by summary judgment. Dutch Maid Logistics, Inc. v. Acuity, 8th Dist. Cuyahoga Nos. 91932 and 92002, 2009-Ohio-1783, ¶ 19. We, therefore, interpret the terms of the Association's Declaration and Bylaws de novo. Continental ...


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