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Fairfax Village Condominium Viii Unit Owners' Association v. Fairfax Village Community Association Inc.

March 11, 1999

FAIRFAX VILLAGE CONDOMINIUM VIII UNIT OWNERS' ASSOCIATION, APPELLANT,
v.
FAIRFAX VILLAGE COMMUNITY ASSOCIATION, INC., APPELLEE.



Before Steadman, Ruiz and Reid, Associate Judges.

The opinion of the court was delivered by: Steadman, Associate Judge

Notice: This opinion is subject to formal revision before publication in the Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the Court of any formal errors so that corrections may be made before the bound volumes go to press.

Appeal from the Superior Court of the District of Columbia (Hon. Lee F. Satterfield, Trial Judge)

Argued December 1, 1998

This appeal arises from a dispute between Fairfax Village Community Association, Inc. ("the Association") and one of its member communities, Fairfax Village Condominium VIII Unit Owners' Association ("Village VIII"). The Association sued Village VIII for breaching its contractual duty to pay a share of the Association's expenses. Village VIII responded that the Association had not demonstrated how Village VIII "benefitted" from the expenses incurred as required by the contract language. The trial court found that Village VIII had breached its duty to pay, and that the Association had adequately satisfied its obligation to allocate expenses according to the benefits realized by member communities. We affirm.

I.

The Association is an umbrella corporation organized under the District of Columbia Nonprofit Corporation Act. Village VIII is one of nine condominium regimes belonging to the Association. Each regime contracts with the Association by way of a Declaration that enumerates the responsibilities of each party. Member regimes are to pay a portion of the Association's expenses and participate in its governance, while the Association is required to provide a variety of services including ownership and maintenance of common grounds and procurement of management and maintenance contracts on behalf of its members. The Association is controlled by a Board of Directors that includes a representative of each member regime.

In 1990 or 1991, a budget committee designed a formula, which may more generally be characterized as a procedure or process of approach, to annually allocate the Association's budget among the nine members. The formula separates community expenditures not directly assignable to any single regime into several categories, such as administration, financial services, janitorial services, maintenance and contracts. Each member regime reimburses the Association for its share of expenses in each category. The latter four categories may contain expenditures assignable to more than one but not all member regimes, depending, for example, on whether a regime is participating in a particular Association contract or service. The administration category, because it is made up of across-the-board items not assignable to any particular members, is allocated to each member community according to its total number of units.

This overall formula was accepted by the Board of Directors, with allowance for yearly modifications as necessary. At the time, Village VIII was a fully participating member of the Association and had a representative on the Board of Directors. The Declaration itself in its paragraph 18(D) requires that Village VIII "perpetuate the existence of the Community Association by actually participating in its management as a member in the manner prescribed." *fn1

In April of 1993, as permitted by the Declaration, Village VIII rescinded the Association's authority to enter contracts on its behalf, but later clarified as to which of the current contracts it would continue participation. Village VIII further requested a detailed accounting of the expenses allocated to it, and stopped making any payments at all in March of 1994. Furthermore, since May 1994, Village VIII has failed to designate any individual as its representative to the Association or otherwise to participate in its management, notwithstanding the obligation under the Declaration. In March 1995, the Association brought suit to collect the unpaid portion of its expenses that it claims Village VIII owes under the Declaration.

II.

The dispute between the parties turns on the application of Section 18(C)(4) of the Declaration, which reads:

"All costs and expenses of Community Association not directly allocable to any specific horizontal property regime will be considered a community expense and will be allocated to each regime benefitted by the service or activity giving rise to such cost and expense, in the ratio of the number of Units in such regime to the total number of Units in Fairfax Village benefited [sic] by such service or activity."

Village VIII contends that the Association has failed to adequately demonstrate that Village VIII "benefitted" from any of the administrative expenses for which it was charged pursuant to the above language. *fn2 However, the trial court found, after a bench trial, that the formula used to allocate expenses among the member regimes was reasonable and that Village VIII had breached its contractual duty to pay its allocable share. Implicit in such a holding is a finding that the Association met its ...


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