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Association Prevails in Covenant Enforcement Matter
One-Year Statute of Limitations Period Deemed Not Applicable to Continuing Violation
The Arapahoe County Court recently ruled in favor of an association on a covenant enforcement matter that Orten & Hindman tried. The association filed a lawsuit against a homeowner for violating a rule which required garage doors to be painted to match the field color of the house. This rule was a clarification of the covenant requiring owners to maintain their property in a neat and clean condition. The rule was also a result of the common scheme that had existed in the association since its creation in 1976. The Court ruled that the one-year statute of limitations period at C.R.S. §38-33.3-123 and C.R.S. §38-41-119 did not apply to prevent the suit as the violation was of a continuing nature and the covenant to maintain, or a rule regarding painting of buildings, was not a “building restriction”.
BACKGROUND
Through its architectural review process, the association had always required that garage doors be painted the same field color as the house. The association adopted guidelines in 1998 to formalize this policy. In late 1997, an owner in the association replaced his garage door with a door that came with a baked-on enameled white paint. The field color of his house was gray. The association approved the type of garage door prior to its installation, but did not have knowledge of the color and did not request the color of the door prior to approving its installation.
After the owner installed the garage door, he did not paint it at all so it did not match the field color of his house. The garage door was installed before the 1998 guidelines were adopted. After their spring walkthrough, the Architectural Control Committee (“ACC”) sent a notice to the owner in June 1998 requesting that he paint the garage door to match the house in accordance with the common scheme and the guidelines. The owner failed to do so. The association sent the owner several more letters over the course of the next two years, requesting he comply and paint his garage door to match the field color of the house. Despite telling the association he would comply when the weather got warmer, the owner failed to paint his garage door.
LAWSUIT
The association filed a lawsuit against the owner for injunctive relief in April 2001 seeking an Order requiring the owner to paint his garage door to match the field color of his house. The defendant retained an attorney and filed an answer. Defendant’s defense was that the association’s claims were barred by its unreasonable delay in filing suit, i.e., waiting until 2001 to file suit for a 1998 violation. The defendant also argued that the one-year statute of limitations, set forth in the Colorado Common Interest Ownership Act at C.R.S. §38-33.3-123, and also C.R.S. §38-41-119, barred the lawsuit. Defendant argued that his failure to paint was like a building restriction violation, which carries a one-year limitation period.
We responded that the violation was of a continuing nature, and that the covenant to maintain was not a building restriction but rather an on-going, continuous covenant. Therefore, there was no one-year statute of limitations, as both statutes cited by the defendant only apply to actions to enforce the terms of a building restriction or to seek removal of a building or improvement to property.
COURT DECISION
The Court ruled in favor of the association, finding that the owner had notice of the covenants and the guidelines and had indeed violated the covenant and guideline by failing to paint his garage door to match the house color. The Court further held that the association was not arbitrary and capricious in its covenant enforcement actions against this owner, that it took similar actions against other owners. The Court also found that because the ACC had a set procedure to view all homes every Spring and send out violation letters only after a majority of the ACC members decide there is a violation, the ACC was acting reasonably, in good faith and not arbitrarily and capriciously in determining the owner violated the covenants and taking action against him.
The Court also held that the association did not unreasonably delay the filing of the lawsuit, even though the first violation letter was sent almost two years prior to the filing of the lawsuit. The Court could find no prejudice to the defendant from the delay and, indeed, the defendant probably added to the delay by telling the association he “would take care of it.”
With regard to the statute of limitations defense, the Court ruled that the covenant to maintain, as clarified by the guideline, was not a building restriction, and that the breach of the covenant was a continuing violation. There was not a one-time violation. Rather, each and every day that the defendant failed to paint his garage door to match the house was a violation of the covenant. Therefore, the one-year statute of limitations period did not apply to bar the lawsuit.
The Court also awarded attorney fees and costs to the association.
The owner has since filed an appeal with the District Court.
PRACTICE POINTER
So, what does this mean for associations? As this is a county court case, it has limited precedential value for associations but it is insightful of how judges view covenant enforcement cases. Judges like seeing set procedures that boards or committees are to follow when inspecting and sending notices for violations. The association should have a procedure, preferably in writing, AND follow it for each and every covenant violation. It also helps when associations are consistent in their enforcement of the covenants.
Should the District Court affirm the ruling, this case will have some precedential value for other cases, not just in Arapahoe County since there is a shortage of case law in Colorado dealing with the issue of continuing violations, the one-year statute of limitations and what constitutes a building restriction. A Colorado District Court case on these issues will provide assistance to associations and their counsel and hopefully some guidance to judges throughout the state.
[PRINTER FRIENDLY VERSION]
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