Anderson v. Applewood Water Ass'n, Inc

COLORADO COURT OF APPEALS

Court of Appeals No. 15CA1139
Larimer County District Court No. 15CV30234
Honorable C. Michelle Brinegar, Judge

Mark R. Anderson, Charles L. Patrick, Alberta R. Patrick, Theodore G. Rossin,
Andrea R. Mihajlov, Marcia R. Petrun, and Mark Petrun,

Petitioners-Appellants,

v.

Applewood Water Association, Inc., d/b/a Applewood Estates Homeowners
Association,

Respondant-Appellee.

ORDER REVERSED IN PART, APPEAL DISMISSED IN PART,
AND CASE REMANDED WITH DIRECTIONS

Division I
Opinion by JUDGE FREYRE
Taubman and Dailey, JJ., concur

Announced November 3, 2016

Herms & Herrera, LLC, David M. Herrera, Fort Collins, Colorado, for Plaintiffs-
Appellants

CYLG, P.C., Christopher S. Maciejewski, Christopher A. Young, Denver,
Colorado, for Defendant-Appellee
¶1 In this appeal from the trial court’s order denying a motion for

preliminary injunction, plaintiffs, Mark R. Anderson, Charles L.

Patrick, Alberta R. Patrick, Theodore G. Rossin, Andrea R. Mihajlov,

Marcia R. Petrun, and Mark Petrun (Owners), sought to enjoin the

defendant, Applewood Water Association, Inc., d/b/a Applewood

Estates Homeowners Association (Association), from performing two

acts. First, Owners sought to enjoin the Association from

conducting special meetings of the board of directors (board) in

violation of its bylaws, § 38-33.3-308(2.5), C.R.S. 2016, of the

Colorado Common Interest Ownership Act (CCIOA), and § 7-128-

203(2), C.R.S. 2016, of the Colorado Revised Nonprofit Corporations

Act (CRNCA). Second, Owners sought to enjoin the Association

from submitting the “Amended and Restated Declaration of

Covenants, Conditions and Restrictions of Applewood Estates”

(Amended Declaration) for a full membership vote based on their

belief that the Amended Declaration illegally conveyed their

property rights in the bridle path easement to the Association and

illegally expanded the scope of use of the easement without their

consent. Because, as a matter of first impression, we conclude the

trial court could enjoin the Association from holding special board

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meetings without providing the notice required under CCIOA and

CRNCA, we reverse the trial court’s order as to that preliminary

injunction request and remand for further factual findings under

Rathke v. MacFarlane, 648 P.2d 648, 653-54 (Colo. 1982). Based

on the information provided in supplemental briefs filed by both

parties, we conclude the second injunction request is moot because

a vote on the Amended Declaration has already occurred.

Therefore, we dismiss that portion of the appeal.

I. Background

¶2 This case involves a dispute between the Association and some

individual lot owners over the board’s decision, made in special

meetings, to retain legal counsel to draft the Amended Declaration.

Owners contend that the board conducted these special meetings

without giving them the required notice and an opportunity to

provide input. They also contend that the Amended Declaration

unlawfully expands the use of the bridal path easement beyond its

original intended use without their consent. Because the relevant

facts are not disputed, we provide a brief history of the covenants

and bylaws and then summarize the hearing evidence.

A. Covenants and Bylaws

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¶3 In 1964, the Applewood Estates plat map was recorded with

the Larimer County Clerk and Recorder and stated, “All Utility &

Bridle Path Easements Are 10’ On Each Side of Property Lines

Unless Otherwise Noted.” This map identified the lots in the

subdivision that were subject to the easements.

¶4 Additionally, the Association was created as a nonprofit

corporation, and it recorded a list of protective covenants.

Covenant 9 related to easements and stated in relevant part:

Easements for installation of utilities, drainage
facilities, and bridal path(s) are served as
shown on the recorded plat.

...

The easement area shall be maintained, at all
times, by the owner of the plot appurtenant to
it, to create a safe area for horsebackriding
[sic].

¶5 Covenant 15 provided for amendments to the covenants by

two-thirds approval of the association members.

¶6 The Association also created bylaws that set forth its purpose

and rules for governance and specifically addressed special

meetings of its members and of the board.1 These bylaws required

1 Owners comprise a subset of the Association’s membership.

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thirty days’ notice to all members of regular and special meetings,

and they permitted special meetings of the board upon giving

reasonable notice to each director. The bylaws did not require

notice of special board meetings to association members.

¶7 In 1983, the Association amended the original covenants by a

two-thirds member vote and added several definitions relevant here.

The amended covenants defined “Common Area” as all real property

owned by the Association for the common use and enjoyment of the

members. It separately defined “Easements” as designated areas

used by horseback riders and hikers and for utilities. It defined

“Common Facilities” as irrigation rights managed by the

Association, easement paths designated on the recorded plats, and

roads.

¶8 The amended covenants further stated that every member had

a right to the enjoyment of the common areas, common facilities,

and easements. They continued to require that the easements be

maintained “by the owner of the plot appurtenant to it so as to

create a safe area for horseback riding” and expanded the use of the

easement to include hiking. They contained the added restriction

that “no motorized vehicles will be allowed.” The amended

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covenants also permitted future amendment by two-thirds approval

of the association members.

B. Hearing Evidence

¶9 In 2014, the board held special meetings to discuss, among

other things, further amending the covenants. Witnesses testified

that the board held these special meetings without providing notice.

They stated that they learned of these meetings from the minutes

posted thereafter.

¶ 10 Hours before the annual meeting, the board circulated a

proposed copy of the Amended Declaration, which purported to

alter the scope of the easements by expanding the activities that

could be conducted in them. A membership vote was scheduled for

June 2015.

¶ 11 The Amended Declaration contained a new provision entitled

“Names & Description of Property/Easements” (Article 2). As

relevant here, this article expanded the permissible uses of the

easement to include all nonmotorized, muscle-powered activities (in

addition to horseback riding and hiking). The Amended Declaration

continued to require members to maintain the bridle paths

appurtenant to their lots, “according to the Rules and Regulations

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set by the Board of Directors,” and continued to permit future

amendment by two-thirds membership approval.

¶ 12 Owners learned of the special board meetings before the

annual membership meeting scheduled in March 2015 and filed an

action seeking declaratory relief that the board could not hold

special meetings without proper notice, and that the easement

could not be unilaterally altered. Contemporaneously, Owners filed

the present action for a preliminary injunction. They asked the trial

court to enjoin the Association from submitting the Amended

Declaration for a vote and to enjoin the board from holding special

meetings contrary to law, pending a decision on the merits of the

case. Following a hearing, the court denied both requests.

II. Preliminary Injunction

¶ 13 Owners make two contentions. First, they contend that the

trial court erred as a matter of law when it found that it had no

legal authority to enjoin future violations of civil statutes. Second,

they contend that the court abused its discretion when it refused to

enjoin the Association from modifying the covenants and expanding

the use of the easement. We agree with their first contention and

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conclude that a trial court may enjoin future violations of a civil

statute. We find their second contention moot.

A. Standard of Review and Applicable Law

¶ 14 We review a trial court’s decision to grant or deny preliminary

injunctive relief for an abuse of discretion. Phx. Capital, Inc. v.

Dowell, 176 P.3d 835, 840 (Colo. App. 2007). We will overturn a

trial court’s decision on a motion for a preliminary injunction if the

court made a legal error or the decision was manifestly arbitrary,

unreasonable, or unfair. Sanger v. Dennis, 148 P.3d 404, 410

(Colo. App. 2006). If only legal, rather than factual, questions are

at issue, we review the trial court’s preliminary injunction ruling de

novo. Gitlitz v. Bellock, 171 P.3d 1274, 1278 (Colo. App. 2007).

¶ 15 A preliminary injunction preserves the status quo or protects a

party’s rights pending the final determination of a cause. Id. (citing

City of Golden v. Simpson, 83 P.3d 87, 96 (Colo. 2004)). Its purpose

is to prevent irreparable harm prior to a decision on the merits of a

case. Id. In considering a motion for a preliminary injunction, the

trial court must find that the moving party has demonstrated (1) a

reasonable probability of success on the merits; (2) a danger of real,

immediate, and irreparable injury that may be prevented by

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injunctive relief; (3) lack of a plain, speedy, and adequate remedy at

law; (4) no disservice to the public interest; (5) a balance of the

equities in favor of the injunction; and (6) the injunction’s

preservation of the status quo pending a trial on the merits. Id.

(citing Rathke, 648 P.2d at 653-54). If each criterion is not met,

injunctive relief should not be granted. Gitlitz, 171 P.3d at 1278.

B. Enjoining Prospective Law Violations

¶ 16 The parties agree that the Association is governed by CCIOA

and CRNCA, both of which address special board meetings;

however, they disagree about which provisions apply. The court did

not resolve this issue or apply the Rathke factors to the issue of

special board meetings because it found, as a matter of law, that it

could not enjoin future violations of civil statutes. Because we

conclude that CCIOA and CRNCA create a legally protected interest

in open meetings and that the trial court may enjoin violations of

their provisions, we remand the case for the court to make factual

findings under Rathke and to determine whether Owners have

satisfied their burden of showing the necessity of enjoining future

special board meetings.

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¶ 17 Resolving this issue involves our interpretation of CCIOA and

CRNCA. Because a court’s primary duty is to give full effect to the

General Assembly’s intent, we begin by examining the statutes’

plain language. Bd. of Cty. Comm’rs v. Hygiene Fire Prot. Dist., 221

P.3d 1063, 1066 (Colo. 2009). We give words and phrases their

plain and ordinary meanings and, where clear, apply the statute as

written. The Triple Crown at Observatory Vill. Ass’n v. Vill. Homes of

Colo., Inc., 2013 COA 150M, ¶ 10. Where two statutes address the

same subject, we construe them together, seeking to avoid

inconsistencies and to reconcile conflicts. Hygiene Fire Prot. Dist.,

221 P.3d at 1066.

¶ 18 Our General Assembly enacted CCIOA to encourage the

establishment of homeowners’ associations. Platt v. Aspenwood

Condo. Ass’n, 214 P.3d 1060, 1064 (Colo. App. 2009). “[I]t is in the

best interests of the state and its citizens to establish a clear,

comprehensive, and uniform framework for the creation and

operation of common interest communities . . . .” § 38-33.3-

102(1)(a), C.R.S. 2016. “[T]he continuation of the economic

prosperity of Colorado is dependent upon the strengthening of

homeowner associations in common interest communities . . . .”

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§ 38-33.3-102(1)(b). Thus, “it is the policy of this state to promote

effective and efficient property management through defined

operational requirements that preserve flexibility for such

homeowner associations.” § 38-33.3-102(1)(d).

¶ 19 To this end, § 38-33.3-114(2), C.R.S. 2016, empowers courts

to enforce CCIOA’s provisions. Id. (“Any right or obligation declared

by this article is enforceable by judicial proceeding.”). Where not

inconsistent with CCIOA, courts have the power to apply

supplemental general principles of law, including the law of

corporations and the law of equity. See § 38-33.3-108, C.R.S. 2016

(CCIOA is supplemented by “[t]he principles of law and equity,

including, but not limited to, the law of corporations and

unincorporated associations, [and] the law of real property.”).

Moreover, remedies should be “liberally administered” to ensure

that an aggrieved party “is put in as good a position as if the other

party had fully performed.” § 38-33.3-114(1).

¶ 20 In addition to CCIOA, § 7-123-104(2)(a), C.R.S. 2016, of

CRNCA provides:

(2) A nonprofit corporation’s power to act may
be challenged:

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(a) In a proceeding against the nonprofit
corporation to enjoin the act. The proceeding
may be brought by a director or by a voting
member or voting members in a derivative
proceeding.

¶ 21 Although no Colorado case has interpreted these specific

statutes, we conclude that the plain language of both statutes gives

a court the authority to enjoin the violation of their provisions

where a movant can show noncompliance and harm.

¶ 22 This conclusion furthers the stated purposes of the statutes to

promote effective and efficient property management and is

consistent with cases granting injunctive relief where the loss of a

contractually negotiated right to control is at issue. See DeJean v.

Grosz, 2015 COA 74, ¶ 13 (the right to prevent a homeowners

association from engaging in contested practices during the

pendency of litigation is a proper subject of an injunction);

K9Shrink, LLC v. Ridgewood Meadows Water & Homeowners Ass’n,

278 P.3d 372, 379 (Colo. App. 2011) (injunctive relief was proper

where “neighbors were irreparably harmed by plaintiffs’ continuing

violation of the Covenant”); Gitlitz, 171 P.3d at 1280 (finding that

the loss of a contractually negotiated right to management and

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control of an organization creates irreparable harm for injunctive

purposes).

¶ 23 Our construction is also consistent with C.R.C.P. 65(a), which

empowers courts to order injunctive relief as “a preventive and

protective remedy, affording relief against future, rather than past,

acts.” Bd. of Cty. Comm’rs v. Pfeifer, 190 Colo. 275, 279, 546 P.2d

946, 949 (1976) (emphasis added); see also RoDa Drilling Co. v.

Siegal, 552 F.3d 1203, 1210 (10th Cir. 2009) (A plaintiff must show

that the harm “is likely to occur before the district court rules on

the merits.” (quoting Greater Yellowstone Coal. v. Flowers, 321 F.3d

1250, 1260 (10th Cir. 2003))); Bd. of Cty. Comm’rs v.

Bowen/Edwards Assocs., Inc., 830 P.2d 1045, 1054 (Colo. 1992)

(Injunctive relief is appropriate when “the action complained of has

caused or has threatened to cause imminent injury to an interest

protected by law.”); Graham v. Hoyl, 157 Colo. 338, 341, 402 P.2d

604, 606 (1965) (The purpose of a preliminary injunction is to

“prevent further harm where harm is alleged.”).

¶ 24 Accordingly, we conclude that the court had the legal

authority to enjoin future violations of CCIOA and CRNCA. Because

Owners presented evidence at the hearing to support their

12
contention that the board conducted special meetings without

giving the notice set forth in CCIOA and CRNCA, and because they

also presented evidence that those meetings concerned

amendments to the existing covenants, we remand the case for the

court to make factual findings under Rathke to determine whether

Owners are entitled to injunctive relief. The court may, in its

discretion, consider additional evidence related to special board

meetings that has developed since the preliminary injunction

hearing.

C. Mootness

¶ 25 As noted, Owners initiated this litigation before the

Association had submitted the Amended Declaration for a formal

membership vote. However, that vote was scheduled to occur

before briefing deadlines. In response to this court’s order for

supplemental briefing on the status of the vote, the parties filed

responses. In their responses, they stated that the vote had

occurred, the amendments had passed by the requisite two-thirds

vote, and that amended covenants had been recorded with the

Larimer County Clerk and Recorder. Thus, the Association

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contends that all issues related to the court’s refusal to enjoin a

vote are moot. For the reasons stated below, we agree.

1. Legal Framework

¶ 26 “The duty of this court, as of every other judicial tribunal, is to

decide actual controversies by a judgment which can be carried into

effect, and not . . . to declare principles or rules of law which cannot

affect the matter in issue before it.” Tippett v. Johnson, 742 P.2d

314, 315 (Colo. 1987) (alteration in original) (quoting Barnes v. Dist.

Court, 199 Colo. 310, 312, 607 P.2d 1008, 1009 (1980)). Thus,

appellate courts ordinarily will not “render opinions on the merits of

an appeal when the issues have become moot.” Johnson v. Griffin,

240 P.3d 404, 406 (Colo. App. 2009). “An issue becomes moot

when the relief granted by the court would not have a practical

effect upon an existing controversy.” Trinidad Sch. Dist. No. 1 v.

Lopez, 963 P.2d 1095, 1102 (Colo. 1998).

¶ 27 The mootness doctrine, however, does not always bar judicial

review of moot issues. Id. Two exceptions to the mootness doctrine

permit courts to consider the merits of an otherwise moot matter:

(1) when the matter involves an issue that is capable of repetition,

yet evading review; or (2) when the matter involves a question of

14
great public importance or recurring constitutional violations.

People in Interest of Ofengand, 183 P.3d 688, 691 (Colo. App. 2008);

Gresh v. Balink, 148 P.3d 419, 422 (Colo. App. 2006).

¶ 28 Issues are capable of repetition when they could, or are likely

to, reoccur in the future. Ofengand, 183 P.3d at 692 (issue capable

of repetition because it was “likely” to reoccur); see also Tesmer v.

Colo. High Sch. Activities Ass’n, 140 P.3d 249, 252 (Colo. App. 2006)

(finding issue capable of repetition because other students “could”

make similar claims in the future). Issues “evad[e] review” when the

“time required to complete the legal process will necessarily render

each specific challenge moot.” Rocky Mountain Ass’n of Credit

Mgmt. v. Dist. Court, 193 Colo. 344, 345-46, 565 P.2d 1345, 1346

(1977) (citation omitted).

2. Analysis

¶ 29 Owners contend that the voting issue is capable of repetition

yet evading review because the board can propose amendments

through special meetings without notice and then submit those

changes for a membership vote. The Association contends any

issues related to the vote are moot because the vote has already

occurred. Neither party asserts that this issue is one of great

15
importance or involves a recurring constitutional violation; thus, we

do not address this exception. State Bd. of Chiropractic Exam’rs v.

Stjernholm, 935 P.2d 959, 971 (Colo. 1997).

¶ 30 Owners sought an injunction to prevent a vote that they

believed would lead to an unlawful result — a unilateral change in

an easement on their property. Because a vote has occurred, the

covenants now reflect the easement use changes — the underlying

issue in this case. Thus, the Association’s authority to change

easement ownership rights by a vote is not capable of repetition in

this case and can now be reviewed on the merits. While this issue

may be capable of repetition in other cases and between other

parties, the issue will not evade review because the “result” of the

vote (here the legality of the easement use change) will be the

subject of the action giving rise to the injunction request.

Accordingly, we conclude that the issue is not capable of repetition

but evading review.

¶ 31 A claim is moot when prospective relief is unnecessary to

remedy an existing controversy or prevent its reoccurrence. Id. The

vote has occurred and no uncertainty remains about whether the

Association can obtain a two-thirds majority vote to change the

16
easement. Thus, we conclude that deciding whether the district

court erred when it denied injunctive relief because the alleged

irreparable injury was speculative “would not have a practical effect

upon an existing controversy.” Trinidad, 963 P.2d at 1102. As

acknowledged by Owners, the issue of harm is now squarely before

the district court for review. Accordingly, we conclude that no

exception to the mootness doctrine applies concerning the

membership vote, and we dismiss this portion of the appeal.

III. Conclusion

¶ 32 We reverse the court’s finding that it lacked the authority to

enjoin future violations of civil statutes, and remand the case for

further factual findings. We direct the court to apply the factors set

forth in Rathke to the evidence including, in its discretion, any

additional evidence related to special board meetings that has

developed since the preliminary injunction hearing, and to

determine whether injunctive relief related to those meetings is

warranted. We dismiss the remaining claims as moot.

JUDGE TAUBMAN and JUDGE DAILEY concur.

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