IN THE SUPREME COURT OF THE STATE OF VERMONT

SUPREME COURT DOCKET NO. 2015-303

SARITA and NAFIS KHAN, ERIC and KATHERINE GADPAILLE,JUDITH LAPOINTE and ROBERT EARLEY, Plaintiffs/Appellees

v.ALPINE HAVEN PROPERTY OWNERS' ASSOCIATION, INC., Defendant/Appellant

Supreme Court Docket no. 2015-303

Interlocutory Appealfrom the

Superior Court, Franklin Unit, Civil DivisionDocket no. 186-5-11 Frcv

______________DEFENDANT/APPELLANT'S

CROSS APPELLEE'S BRIEF/REPLY BRIEF______________

DATED February 26, 2016

ALPINE HAVEN PROPERTYOWNERS' ASSOCIATION, INC.

Submitted by

Robert A. GensburgAttorney for Defendant/AppellantP.O. Box 248364 Railroad StreetSt. Johnsbury, VT 05819telephone (802) 748-5338fax (802) 748 1673email bob@neklaw.net

TABLE OF CONTENTS

Table of cases, statutes and other authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iiArgument

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Statements In Plaintiffs' Brief With Which The Association Takes Issue.. . . . . . . . . . . . . 1

Alpine Haven Is A Common Interest Community.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

The Contract Clause Of The US. Constitution Does Not Apply To This Case,And In Any Event Has Not Been Violated. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

A Homeowners' Association Can Amend Its Governing DocumentsAs Long As The Changes Are Reasonable And Nor Burdensome. . . . . . . . . . . . . . . . . . 12

The 171234 Canada Inc. Case Has Limited, If Any, Precedential AuthorityIn The Instant Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

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TABLE OF CASES

171234 v. Canada, Inc. v. AHA Water Cooperative, Inc.. . . . . . . . . . . . . . . . . . . . . . . 7, 20-22, 23Alpine Haven Property Owners' Association, Inc. v. Brewin, docket no. 168-6-12 Oscv. . . . . . 10Alpine Haven Property Owners' Association, Inc. v. Orrock, docket no. S468-97 Fc. . . . . . . . . . 3Cranley v. National Life Insurance Company, 144 F.Supp. 2d 291 (D. Vt. 2001). . . . . . . . . 11-12Deptula v. Leisure Properties, Inc. and Daberer, docket no. S274-89 Fc. . . . . . . . . . . . . . . 3, 4, 19Hubbard v. Bolieau, 144 Vt. 373, 477 A,2d 972 (1984). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 13Leisure Properties, Inc. v. Svobodny, docket no. S149-9-97 Fc. . . . . . . . . . . . . . . . . . . . . . . . . . 21Parker v. Town of Milton, 169 Vt. 74, 726 A.2d 477 (1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Sanborn v. Braley, 47 Vt. 170. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Borman v. 18718 Borman, LLC, 777 F.3d 816 (6 Cir. 2015). . . . . . . . . . . . . . . . . . . . . . . . . . . 11th

Boyles v. Housmann, 517 N.W. 2d 610 (Neb. 1994). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Caughlin Ranch Homeowners Association v. Caughlin Club, 849 P.2d 310 (Nev. 1993). . . . . . 15Energy Reserves Group v. Kansas Power and Light co., 459 U.S. 400 (1983). . . . . . . . . . . . . . . 11Evergreen Highlands Association v. West 73 P.3d 1 (Colo. 2003). . . . . . . . . . . . . . . . . . 13-15, 19Glen Iris Community Association v. Kelly, 437 N.W.2d 25 (Mich. App. 1989). . . . . . . . . . . . . 18Lake Tishimongo Property Owners Association v. Cronin, 679 S.W.2d 852 (Mo. 1984). . . 17-18Lugar v. Edmondson Oli Company, 457 U.S. 922 (1982).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Meresse v. Stelma, 999 P.2d 1267 (Wash. Ct. App. 2000). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Perkins v. Kapsokefalos, 869 N.Y.S.2s 667 (App. Div. 2008). . . . . . . . . . . . . . . . . . . . . . . . . . . 17Sea Gate Association v. Fleischer, 211 N.Y.S. 2d 767 (Sup. Ct. 1960). . . . . . . . . . . . . . . . . . . . 17Seaview Association of Fire Island v. Williams, 69 N.Y.2d 987 (1987).. . . . . . . . . . . . . . . . 17, 18Spinnler Colony Point Association v. Nash, 689 A.2d 1026 (Pa.Comm. 1997). . . . . . . . . . . . . . 17Sullivan v. O'Connor, 961 N.E.2d 143 (Mass. App. 2012). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Sunday Canyon Property Owners' Association, Inc. v. Annett, 978 S.W.2d 654 (Tex. Ct. App. 1998). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16Weatherby Lake Improvement Company v. Sherman, 611 S.W.2d 326 (Mo. App. 1980). . . 16-17Windemere Homeowners Association, Inc. v. McCue, 990 P.2d 768 (Mont. 1999). . . . . . . . . . 16Zito v. Gerken, 587 N.E. 2d 1048 (Ill. Ct. App. 1992). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15-16

TABLE OF STATUTES

27 V.S.A. § 1-103(13). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 2, 4, 8, 2117 V.S.A. § 2702. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227 V.S.A. § 1-103(7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 927 V.S.A. § 1-204. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9, 2327 V.S.A. § 1-110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

TABLE OF OTHER AUTHORITIES

Restatement (Third) Property: Servitudes § 6.2.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17Restatement (Third) Property: Servitudes § 6.5.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

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INTRODUCTION

The Association has found it difficult to organize this brief because of the unusual

procedural posture of this appeal. Present before the court are seven different questions, some of

which were decided favorably to the Association, and one of which is adverse to the

Association's interests. There are appeals and cross appeals on questions that present interrelated

questions that should, in some respects, be treated together. Therefore, the Association has

organized this brief, which is partly an appellee's brief and partly a reply brief, to identify and

respond to specific statements by the Plaintiffs with which the Association takes issue, and then

to reply to their arguments.

STATEMENTS IN PLAINTIFFS' BRIEF WITH WHICH THE ASSOCIATION TAKES ISSUE

Page 1 of Plaintiffs' brief: None of the documents that are considered essential for aplanned community, such as a declaration, bylaws for an Association, planning approvals,etc. were recorded for the development(s).

This is not correct in two respects. In the case of a pre-existing common interest

community, "bylaws for an Association, planning approvals, etc." are nowhere required by Title

27A. All that is required is a declaration, and as the Association has continually shown

throughout this case, the series of deeds by which Mr. Daberer created the development is its

declaration. § 1-103(13) ; § 1-103 comment 14.1

Page 4 of Plaintiffs' Brief: Daberer never recorded anything that could be construedas a declaration, as that term is contemplated in the Act, nor were a plat plan or statementof covenants recorded prior to or during the sale of the properties. Judge Pearson decision.

For the same reason, this statement is not correct. The Plaintiffs seem to be unable to

Citations to sections are to sections of Title 27A of the Vermont Statute Annotated, unless otherwise noted.1

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accept what comment 14 to § 1-103 tells them -- a series of deeds which creates the relationship

that constitutes a common interest community is a declaration.

Page 5 of Plaintiffs' Brief: Neither the Khan nor Gadpaille undeveloped large lotswere ever billed by the Association for a fee. Several other undeveloped lots within thedevelopment proper have likewise never been charged a fee where, just like Khan andGadpaille, the lot owner was already paying a fee as a chalet owner.

The Plaintiffs are correct. The Association does not assess undeveloped lots in the

common interest community if their owners also own a chalet. This is true of Mr. and Mrs.

Gadpaille, Mr. and Mrs. Khan, and every other chalet owner who also owns an undeveloped lot

in Alpine Haven. PC 327, 587. That is how the Association's members voted to assess the

various kinds of property in the development. Of course, if the "large lots" are not part of the

common interest community, as the trial court concluded and from which the Association has not

appealed, then the Khan and Gadpaille large lots will be responsible for their pro rata shares of

the Association's road costs. Hubbard v. Bolieau, 144 Vt. 373, 477 A.2d 972 (1984); 17 V.S.A.

§ 2702.

Page 6 of Plaintiffs' Brief: The Association purports to have declared itself to be aCommon Interest Community under the Act and to amend its bylaws in 2002, and furtherpurports to have amended the declaration and the bylaws again in 2011.

Both the trial court, PC 10, and the Plaintiffs have unfairly used a truncated version of the

words the Association actually used in its 2002 amended declaration and bylaws, creating the

impression that the Association just made up its status as a common interest community. The

first clause of the preamble to the 2002 amendments actually reads:

WHEREAS, the Association deems itself to be a preexisting "common interestcommunity'' as defined in the Vermont Common Interest Ownership Act (Title 27A,Vermont Statutes Annotated) (the "Act"), which designation having been ascribedto the Association by the Franklin Superior Court in the matter of Alpine HavenProperty Owners Association. Inc. vs. David Orrock et al, (S468-97 Fc).

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Since the trial court in the Orrock case had recently said that Alpine Haven was a

common interest community, the Association merely recited that legal finding in the preamble to

the 2002 amendments. In other words, the Association "deemed" itself to be a preexisting

common interest community because the trial court in the Orrock case said it was. It did not just

make it up, as the Plaintiffs and the trial court seem to imply.

Page 7 of Plaintiffs' Brief: Asking what the trial court meant by the "reasonable fee" thePlaintiffs have to pay for the services they receive from the Association, Plaintiffs argued for apro rata share of the costs related to that service, while Defendant argued for a feereflecting the 2002 decision in Alpine Haven Property Owners Association v. Deptula, 2003Vt 51, 830 A.2d 78, 2003 175 VT 159, adjusted for inflation.

This statement requires two corrections. First, the decision on which the Association

relies is the 1992 Martin Decision in Deptula v. Leisure Properties, Inc. and Daberer, docket no.

S274-89 Fc. Second and more important, the Association does not argue that the "reasonable

fee" for these services today is necessarily $1,200.00 adjusted for inflation that the Martin

Decision found was reasonable in 1992. Rather, the Association argues that if a $1,200.00 fee

was reasonable in 1992, then one way among many of determining whether the Association's

current $2,177.93 assessment in 2015 is reasonable, is to compare it to $1,200.00 in 1992 dollars.

They come out about the same. 2

Page 7 of Plaintiffs' Brief: The nature of the 2002 document is confusing. It does notappear to be a “Declaration” under the Act, but rather just a simple declaration, i.e.,statement that the Defendant is in fact a homeowners Association under the Act and thatthe development(s) are now CIC.

In 2002, the Association amended its declaration, principally to establish as of record

which sections of Title 27A applied to Alpine Haven, and restated its 1996 bylaws almost word

In fact, if the Association's expenses for the significant legal fees it is incurring in this and the Brewin and2

Deptula cases are excluded, its assessments would be significantly less than $1,200.00, adjusted for inflation.

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for word. The Association did this in a single instrument, which the Association now agrees

would have been better handled in two separate instruments, one for the declaration and a

separate instrument for the bylaws. The Association also adopted, simultaneously, a Certificate

of Corporate Action in which its members listed every section of Title 27A that the members

elected to have apply to the Alpine Haven community going forward.

Page 10 of Plaintiffs' Brief: Plaintiffs concede that a series of deeds may be found tobe a declaration, but only if properly drafted to contain the elements of a declaration andput all purchasers on notice that a planned development is being created from the very firstdeed and all that follow.

Plaintiffs cite no authority whatsoever for this statement, and it makes little sense. If the

Association correctly understands the Plaintiffs, the statement is contrary to the principle

established in comment 14 to § 1-103(13), which states that all that is required for a declaration

is that it create the relationship among the unit owners which constitutes a common interest

community, and no more.

Pages 10-11 of Plaintiffs' Brief: The covenants were written for Daberer’s personalbenefit.

The Plaintiffs unilaterally put this proposition in their brief, without citing any authority

for it. It is wrong. Daberer specifically pled, in the 1992 Franklin Superior Court case that

Deptula brought against him, that "The covenants and provisions contained in [Plaintiff

Deptula's] deed run with the land, for the benefit of the land, and not for the personal benefit of

the owner-defendants [Daberer]. . . ." Deptula v. Leisure Properties, Inc. and Daberer, docket

no S274-89 Fc.

Page 11 of Plaintiffs' Brief: Two other parcels totaling 19 acres, but apparently notreferenced in the below proceedings were also conveyed. None of these parcels are locatedon a public highway, but all have frontage on what is now the private Alpine Haven roadsystem. No mention of services or fees is made in any of these deeds.

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If these two parcels totaling 19 acres were not referenced in the proceedings below, they

are not part of the record on appeal and should not be considered by this court. Ordinarily, the

Association would not make this objection to the Plaintiffs' Brief and would just deal with them,

but the Association cannot be sure about which lots the Plaintiffs are referring to and, therefore,

cannot respond except as follows. If they are the lots that Northeast Land and Trading sold to (i)

Laura and Shawn Brinton and John Ehner, and to (ii) Arthur Gasbarro (now O'Brien), the

Association represents to the Court that each lot is within the confines of the area that the trial

court found made up the common interest community. The Brinton lot is now improved with a

single family residence, and the Association assesses the Brinton lot as a chalet. The

O'Brien/Gasbarro lot is undeveloped, and the Associations assesses it as an undeveloped lot, at

50% of the chalet assessment. PC 313. Both the Brintons and the O'Briens timely pay the

Association's assessments.

Pages 11-12 of Plaintiffs' Brief: Within Montgomery Daberer conveyed several largerundeveloped lots aside from the conveyance to de Silva. These were to Deptula, 10.7 acres(no covenants); Microdata, 22+ acres (r.o.w. only); Szych 10.17 acres (no covenants);Schulman, 10.3 acres (no covenants); and in Westfield at least the following: 6.51 to4313224 Canada, Inc. (no covenants) and to Zver and Scali, 4.79 acres (no covenants).Deeds are at SPC 4-14, PC 7 pages 11-12.

Again, the Plaintiffs argue matters that were not raised in the trial court, and the

Association objects to consideration of them for that reason. The Association responds to them

as follows:

Deptula 10.7 acres: This was accomplished in two conveyances, both of which included

permit deferral restrictions under Chapter 1 of the Department of Environmental Conservation's

Wastewater and Potable Water Supply rules. Neither lot can be developed for any purpose

without first obtaining a wastewater and potable water supply permit.

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Microdata 22+ acres: The absence of restrictive covenants in this deed notwithstanding, a

unit owner in the Alpine Haven development could successfully enforce the application of the

covenants in the other deeds if the owner of the Microdata parcel attempted to make

improvements that would violate those covenants. Restatement (Third) of Property: Servitudes

§8.3(2).

Szych 10.17 acres: This lot is located over 1/4 mile from the development, has frontage

on Route 242, never used and does not now use any of the Association's services, and has never

been treated as a part of the Alpine Haven development.

Schulman 10.3 acres: This lot is located over 1/4 mile from the development, has

frontage on Route 242, never used and does not now use any of the Association's services, and

has never been treated as a part of the Alpine Haven development.

4313224 Canada, Inc. 6.51 acres: This parcel was owned by Alpine Haven's developer

Hubert Daberer. It lies in the heart of the development, in Westfield. It was purchased by

4313224 Canada, Inc., which is owned by the family that owns chalet #2. A prospective

purchaser backed out of a sales contract with Mr. Daberer because the lot was part of the Alpine

Haven common interest community, and 4313224 Canada, Inc. stepped in and bought it,

understanding that condition.

Zver and Scali 4.79 acres: This lot is located on the extreme east end of the development,

has frontage on Route 242, has never used and does not now use any of the Association's

services, and has never been treated as a part of the Alpine Haven development.

Page 13 of Plaintiffs' Brief: If a series of deeds does not from the first deed executedcontain the information that would be found in a plat plan and a declaration, it raises thequestion “when would such a series become a plan evidencing a declaration?

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It is submitted that, if Alpine Haven's series of deeds creates the relationship that

constitutes a common interest community, the series of deeds became "a plan evidencing a

declaration" on January 1, 1999, the date on which Title 27A became effective.

Page 14 of Plaintiffs' Brief: This Court has previously examined the deeds to theAlpine Haven development, 171234 Canada Inc. v. AHA Water Cooperative, Inc., 2008 Vt.115, 184 Vt. 633 and upheld the trial court’s determination that the deeds do not create aCIC. Examining the same deeds at issue here, the trial court found that “[w]ith respect tothe UCIOA, . . . AHA [Water Cooperative] had neither recorded a declaration norreferred to the declaration in the deeds, as the UCIOA requires.”

Like the trial court, the Association submits that this Court's decision in 171234 Canada,Inc. has little relevance to the issues in this case. See the discussion in this brief beginning atpage 21.

ALPINE HAVEN IS A COMMON INTEREST COMMUNITYQUESTION 1

The principal question in this appeal, as it was at the trial below, is whether the Alpine

Haven development in Westfield and Montgomery is a common interest community that is

governed by Title 27A of the Vermont Statutes. Although the record includes a very large

number of documents, the answer to the question is relatively straightforward.

A common interest community is "real estate with respect to which a person, by virtue of

his ownership of a unit, is obligated to pay for real estate taxes, insurance premiums,

maintenance, or improvement of other real estate described in a declaration." § 1-103(7).

"Declaration" means "any instruments, however denominated, that create a common interest

community, including any amendments to those instruments. § 1-103(13). The term

"declaration" includes "a series of deeds to units with common mutually beneficial restrictions."

§ 1-103(13), comment 14.

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Each of the Plaintiffs owns a chalet in the Alpine Haven development, and Mr. and Mrs.

Gadpaille own two. Plaintiffs' Complaint ¶¶ 1-4, PC 54-55; Pearson Decision PC 6. By virtue3

of their ownership of these chalets, each Plaintiff (as were each of their predecessors in title) is

obligated by his or her deed to pay for real estate taxes, insurance premiums, maintenance, or

improvement of other real estate -- at a minimum, the four and one half miles of roads (the fee

simple title to which is owned by the Association, Pearson Decision PC 4, Rainville Decision PC

30, and the street lights in the development. Plaintiffs' Response to Counter-Claims of

Defendant, PC 84.

There is no dispute that each Plaintiff, together with all of the other chalet owners in the

development, are obligated under the series of some 85 deeds by which the development was

created, to pay for expenses related to real estate in the development -- roads and street lights --

other than and in addition to the chalets they own. Under comment 14 to § 1-103(13), that series

of deeds constitutes the development's Title 27A declaration. This is how the general assembly

defined common interest communities, intentionally including those like Alpine Haven that were

created before Title 27A's effective date. "Simply stated, all of the owners of chalets and

property within the Alpine Haven Development who have deeded rights to municipal type

services came under the ambit of this act when it became law in 1994. See 27A V. S.A. 1-103(7)

The Association refers to the four different trial court decisions involving Alpine Haven as the "Pearson 3

Decision," October 9, 2013 Memorandum Decision and Orders in Sarita Khan et al. v. Alpine HavenProperty Owners' Association, Inc., docket no. 186-5-11, PC 3-27 (Pearson, J.); the "Rainville Decision",May 21, 2015 Decision and Order on Cross Motions for Summary Judgment in Sarita Khan et al. v. AlpineHaven Property Owners' Association, Inc., docket no. 186-5-11 (Rainville, J.); the "Cashman Decision,"August 8, 2000 Decision on Motions for Summary Judgment in Alpine Haven Property Owners'Association, Inc. v. Deptula, Orrock et al., docket no. S468-97 Fc (Cashman, J.); and the "MartinDecision," September 22, 1992 Judgment Order in Deptula v. Leisure Properties, Inc. et al., docket no.S274-89 Fc (Martin, J.).

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and 1-204." Cashman Decision, page 19. Judge Cashman understandably got the effective date

wrong, because the title of the Uniform law from which Title 27A was adapted is the "Uniform

Common Interest Ownership Act (1994)," but his observation about the legislature's intention to

bring these kinds of developments under the umbrella of Title 27A remains valid.

And as Judge Pearson explained:

one raison d'etre for [Title 72A] is to bring some order out of chaos so thatpreexisting (i.e. pre-1999) developments, in which such instruments (and otherdocumentation) were not routinely used, could function more efficiently withoutconstant litigation (such as the many cases involving Alpine Haven) serving as aconstant distraction for ordinary homeowners, and a perpetual drain on limitedresources and funds.

The legislature has spoken. Pre-1999 developments like Alpine Haven are common

interest communities subject to Title 27A. The Plaintiffs have not shown why the trial court's

conclusion to this effect is erroneous. It is submitted that it should not be disturbed on appeal.

THE CONTRACT CLAUSE OF THE U.S. CONSTITUTIONDOES NOT APPLY TO THIS CASE,

AND IN ANY EVENT HAS NOT BEEN VIOLATEDQUESTIONS 1 AND 2

The Plaintiffs argue that the changes the Association's members made to their declaration

and bylaws in 2002 and 2011 cannot be effective as to them without their consent. Plaintiffs'

Brief page 15. Their objection seems to be that these changes somehow deprived them of

contract/property rights that they enjoyed before the changes became effective. In fact, none of

the contract or property rights that each Plaintiff acquired by their respective deeds -- rights to

ownership of their respective chalets, access to and from Route 242 over the development's

interior road system, maintenance of streetlights, and garbage pickup, plus driveway plowing

which is not mentioned in any of their deeds -- has been affected one way or the other by either

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the 2002 or the 2011 amendments to the Association's governing instruments. Each Plaintiff

enjoyed all of those rights before the 2002 amendments, and each Plaintiff enjoys all of them

today. Indeed, Plaintiff Eric Gadpaille so testified at the trial in the Orleans Unit case of Alpine

Haven Property Owners' Association, Inc . v. Brewin, docket no. 168-6-12 Oscv. When asked

"Which of those rights did the adoption of this 2011 declaration deprive you of," he answered "I

don't know that this adoption deprived me of any rights. . . ." PC 741.

The Plaintiffs cast this part of their argument as a claim under Article I, section 10, clause

1, of the U.S. Constitution, the Contract Clause. Plaintiffs' Brief page 15. The Contract Clause

provides that "No State shall . . . pass any . . . Law impairing the Obligation of Contracts." As

the Plaintiffs state in their brief at page 15, the trial court erroneously treated their argument on

this point as one involving procedural due process. Pearson Decision PC 13; Rainville Decision

39. The Association explained in its opening brief why the Plaintiffs' procedural due process

rights had been scrupulously honored when the 2002 and 2011 amendments were adopted -- all

of them had notice of the proposed amendments before they were made, and all of them attended

the 2002 meeting at which the amendments were adopted. Association's Opening Brief page 9 et

seq. The Plaintiffs make no argument in their brief to the contrary. Therefore, the Plaintiffs

apparently agree with the Association that the trial court's conclusion that the Plaintiffs'

procedural due process rights had been violated was error. It is submitted that this part of the

trial court's decisions, from which the Association appealed, should be reversed by this Court.

This Contract Clause argument must necessarily fail in and of itself for at least two

reasons, both of which obviate the need for a remand. First, a claim that the Contract Clause has

been violated must have, as one of its predicates, a substantial impairment of some contract right.

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See Energy Reserves Group v. Kansas Power & Light Co., 459 U.S. 400, 103 S. Ct. 697, 74 L.

Ed. 2d 569 (1983), in which the Supreme Court explained that the "threshold inquiry" in any

Contract Clause case is whether state law has operated as a substantial impairment of a

contractual relationship. Id. at 411. In Borman, LLC v. 18718 Borman, LLC, 777 F.3d 816, (6th

Cir. 2015), the Sixth Circuit Court of Appeals wrote that, under Energy Reserves, "The dividing

line [between substantiality and insubstantiality] falls somewhere between the total destruction of

contractual expectations . . . and laws which restrict a party to those gains reasonably to be

expected from the contract." Id. at 826. The Plaintiffs have neither pled nor have they shown, not

in the trial court nor in their brief, that any contract rights that they possessed with respect to the

Association have been substantially impaired by the amendments about which they complain.

The Association's actions of which the Plaintiffs complain simply do not fall between the outer

limits of a Contract Clause claim as the Energy Reserve and Borman courts defined them.

Second, another predicate to a successful Contract Clause claim is, as in due process

claims, Parker v. Town of Milton, 169 Vt. 74, 726 A.2d 477, (Vt. 1998), the presence of some

state action or involvement by a state actor that caused the purported impairment. If there has

been no state action or no state actor, then there has been no violation of the Clause. Cranley v.

National Life Insurance Company, 144 F. Supp. 2d 291 (D. Vt. 2001), aff'd. 318 F.3d 105 (2d

Cir. 2003) (conversion of mutual company to stock company pursuant to state statute). The mere

existence of a state statute pursuant to which a private action complained of was taken does not

constitute state action: "Action by a private party pursuant to this statute, without something

more, was not sufficient to justify a characterization of that party as a 'state actor.'" Lugar v.

Edmondson Oil Company, 102 S. Ct. 2744, 2754, 457 U.S. 922, 73 L. Ed. 2d 482 (1982). The

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Plaintiffs have not shown that there was any state action, or any involvement of a state actor,

when the Association amended its governing instruments in 2002 and 2011. Indeed, there was

none. Based on the record, therefore, and on the Plaintiffs' brief, they have no Contract Clause

claim and their argument to this effect should be rejected by this Court without remand to the

Superior Court.

A HOMEOWNERS' ASSOCIATION CAN AMEND ITS GOVERNING DOCUMENTSAS LONG AS THE CHANGES ARE REASONABLE AND NOT BURDENSOME

QUESTIONS 2, 3 AND 4

The Plaintiffs' deeds required Mr. Daberer, and now the Association, to provide them and

the other chalet owners with those services that are mentioned in their deeds. The deeds also

require the Plaintiffs to pay the Association a reasonable fee for those services. At the time that

the Plaintiffs bought their chalets, the Association also provided other amenities that are not

spelled out in their deeds, such as hiking trails, grounds maintenance, a swimming pool and

cabana, and tennis courts. Under Mr. Daberer's regime, those chalet owners who wanted to use

the swimming pool and tennis courts paid an additional fee. After the Association acquired Mr.

Daberer's rights and obligations with respect to these services in 1998, these additional amenities

became available for use by any chalet owner, and the expense associated with them was

accordingly included in the annual assessments that the Association made (and continues to

make) against the chalets. The Plaintiffs regard this as the imposition of an additional expense

that they do not have to pay because those amenities are not spelled out in their deeds.

The question the Plaintiffs raise -- whether a property owner can be subject to any

conditions that are not spelled out in his or her deed -- has been considered both in Vermont and

in several other jurisdictions. The controlling case in Vermont is Hubbard v. Bolieau, 144 Vt.

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373, 477 A.2d 972 (1984). Hubbard holds that "when several persons enjoy a common benefit,

all must contribute rateably to the discharge of the burdens incident to the existence of the

benefit." Id. at 375 (citation and quotation marks omitted). There is nothing remarkable about

such a patently fair principle, and in Vermont jurisprudence it extends at least as far back as

Sanborn v. Braley, 47 Vt. 170 (1874).

The leading non-Vermont case that examines this issue is Evergreen Highlands

Association v. West, 73 P.3d 1 (Colo. 2003), cert. denied, 540 U.S. 1106. See, also, West v.

Evergreen Highlands Association, 213 Fed. Appx. 670 (10th cir. 2007). Evergreen is

particularly important because it was decided under the Uniform Common Interest Ownership

Act of 1994, Colorado's version of Title 27A. Section 1-110 of the Vermont version provides

that "This title shall be applied and construed to make uniform the law with respect to the subject

of this title among states which enact it." Accordingly, Evergreen's authority should be treated as

more persuasive than an ordinary decision from another state's supreme court in which a uniform

law is not involved.

In Evergreen, a developer created a 63 lot residential subdivision in 1972, with a 22 acre

park containing hiking and equestrian trails, a barn and stables, a ball field, a fishing pond, and

tennis courts. Neither the protective covenants that the developer recorded nor the developer's

deeds to the individual lots required the lot owners to be members of or pay dues to any

Association. The Evergreen Highlands homeowners' Association relied on voluntary

contributions from the lot owners to pay for the expenses of maintaining the park including

property taxes, insurance for the park area and its structures, weed spraying, tennis court

resurfacing, and barn and stable maintenance. 73 P.3d at 6. The Evergreen protective covenants

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included a provision that those covenants could be modified by a supermajority vote of the lot

owners. In 1995, after West had purchased his lot, the lot owners amended the covenants, to

require "all lot owners to be members of and pay assessments to the Evergreen homeowners'

Association, and permitted the Association to impose liens on the property of any owners who

failed to pay their assessment." Id. at 7. West refused to become a member of the Association

and refused to pay the assessment against his lot. The Association threatened to sue and file a

lien against his lot, so West brought a preemptive action to challenge the validity of the

amendment, making essentially the same arguments that the Plaintiffs make in the case at bar.

His deed did not require him to be a member of the Association, he argued, and the Association

could not expand his obligations beyond those that were spelled out in his deed, or make him

become a member of any Association he did not want to join. Ibid.

The Association counterclaimed for the assessments that West had refused to pay. The

Association prevailed in the trial court, but a Court of Appeals reversed, holding that any

ambiguity in the protective covenants should be resolved "in favor of the free and unrestricted

use of property." West v. Evergreen Highlands Association, 55 P. 3d 151, 154 (Colo. App.2001).

The Colorado Supreme Court granted certiorari for the purpose of reversing the Court of

Appeals. The Supreme Court held that West could be required to pay the new lot assessments,

both against his will and after the fact, as long as they were "neither unreasonable nor

burdensome." Evergreen at 7. "To the contrary," the Colorado Supreme Court expressly noted,

"the existence of a well-maintained park area immediately adjacent to [West's] lot undoubtedly

enhances Respondent's property value." Ibid. As the Colorado Supreme Court later explained,

id. at 11-12 (italics in original):

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Without the implied authority to levy assessments, these latter communities areplaced in the untenable position of being obligated to maintain facilities andinfrastructure without any viable economic means by which to do so. In order toavoid the grave public policy concerns this outcome would create, we today adopt theapproach taken by many other states as well as the Restatement of Property, whichprovides that "the power to raise funds reasonably necessary to carry out thefunctions of a common interest community will be implied if not expressly grantedby the declaration." Restatement (Third) of Property: Servitudes § 6.5 cmt. b (2000). We therefore hold that, even in the absence of an express covenant mandating thepayment of assessments, the Association has the implied power to levy assessmentsagainst lot owners in order to raise the necessary funds to maintain the common areasof the subdivision.

Citing six decisions from other jurisdictions, the court then made a special effort to

explain which kinds of amendments would be unreasonable or burdensome and therefore

unenforceable against a dissenter, and which kinds would not. Amendments that other

jurisdictions had found unreasonable included changing a building setback requirement that

made a lot unbuildable, citing Boyles v. Hausmann, 517 N.W.2d 610 (Neb. 1994); taking a

portion of a lot owner's property by widening an access easement, citing Meresse v. Stelma, 999

P.2d 1267 (Wash. Ct. App. 2000); and changing covenants that originally assessed only

residential property to impose a new assessment on commercial property that was previously

exempt, citing Caughlin Ranch Homeowners Association v. Caughlin Club, 849 P.2d 310 (Nev.

1993). Changes that were not unreasonable or burdensome included changes requiring

membership in a homeowners Association, mandatory dues and enforcement powers, citing Zito

v. Gerken, 587 N.E.2d 1048 (Ill. App. Ct. 1992); creating a homeowners Association that could

levy mandatory lot assessments to maintain commonly owned property, citing Sunday Canyon

Property Owners Association v. Annett, 978 S.W.2d 654 (Tex. Ct. App. 1998); and creating a

homeowners Association in a subdivision to assess the costs of maintaining roads against the lot

owners, citing Windemere Homeowners Association, Inc. v. McCue, 990 P.2d 769 (Mont.1999).

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This explanation by the Colorado Supreme Court expresses the same fundamental

Vermont common law principle that is found in Hubbard. The beautification of the Alpine

Haven development, and the mere availability of its recreational facilities, in addition to the

roads and streetlights, garbage pickup and driveway plowing, are integral parts of the common

interest community in which the Plaintiffs own property, and they provide a direct benefit to each

Plaintiff's chalet. As the spreadsheet at page 19 below shows, the additional annual cost to the

Plaintiffs of these benefits is but $95.57 in inflated dollars more than the $1,200.00 reasonable

fee (in 1992) that their deeds call for. This is hardly "unreasonable or burdensome," the test the

Colorado Supreme Court employed in Evergreen Highlands.

This decision -- that reasonable and modest changes for the common good can be made to

lot owners in a subdivision -- is consistent with a significant number of decisions that have been

made in other states. Foremost among them is Weatherby Lake Improvement Company v.

Sherman, 611 S.W.2d 326 (Mo. App. 1980), which involved a residential subdivision on a large

man made lake. The original subdivision plat showed the lake, "but the deeds to the lots . . . did

not recite any restrictions as to privileges or responsibilities in connection with the Lake, nor was

there any homeowner's Association or other such organization created at that time." Id. at 328.

A dam on the lake needed very expensive repairs, and the lot owners as a group voted to impose

an assessment on every lot to raise the money for the repairs. Lot owner Sherman refused to pay

his assessment because his deed did not require it, and because he did not use the lake. The

Missouri Court of Appeals held that all of the lot owners in the subdivision could be required to

pay assessments to cover the costs of repairing the dam even though their deeds did not include

any such obligation, and even though a lot owner (as the Plaintiffs claim in the case at bar) did

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not use the lake at all. See, also, Restatement (Third) of Property: Servitudes §§ 6.2 and 6.5 for

the same principle, citing Weatherby as authority. Other decisions with essentially the same

holding include Perkins v. Kapsokefalos, 869 N.Y.S.2d 667 (N.Y. App. Div. 2008), in which the

Third Department of the Appellate Division held that a home owner could be required to pay

assessments for services that were not mentioned in her deed; Sea Gate Association v. Fleischer,

211 N.Y.S.2d 767 (1960), holding that non-members of a homeowners association could be

compelled to pay association assessments for common facilities; Seaview Association of Fire

Island v. Williams, 69 N.Y.2d 987 (1987), holding that nonmembers of homeowners association

and non-users of the facilities could nevertheless be compelled to pay Association assessments;

Spinnler Point Colony Association v. Nash, 689 A.2d 1026 (Pa.Comm. 1997), holding that a

property owner in a subdivision has an obligation to pay assessments to its homeowners

association even though the chain of title makes no reference to the assessments; Sullivan v.

O'Connor, 961 N.E.2d 143 (Mass. App. 2012), holding that a lot owner in a common scheme

development (like Alpine Haven, see Martin Decision Appellant's Supplemental Printed Case

21) can be compelled to pay assessments for the upkeep of the subdivision's amenities, even

though his or her deed is silent about that obligation; Lake Tishomingo Property Owners

Association v. Cronin, 679 S.W.2d 852 (Mo. 1984), holding that fairness and equity require lot

owner to share in the extraordinary cost of dredging a man-made lake in a development even

though the assessment exceeds that provided for in the deeds; and Glen Iris Community

Association v. Kelly, 437 N.W.2d 25 (Mich. App. 1989), holding that homeowners' Association

had the power to improve access to a lake over two commonly-owned lots even though the

developer's power to make those changes had not been transferred to the Association. As the

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New York Court of Appeals explained in Seaview, 69 N.Y.2d at 989 (italics added):

Where there is knowledge that a private community homeowners' Associationprovides facilities and services for the benefit of community residents, the purchaseof property there may manifest acceptance of conditions of ownership, among thempayment for the facilities and services offered. The resulting implied-in-fact contractincludes the obligation to pay a proportionate share of the full cost of maintainingthose facilities and services, not merely the reasonable value of those actually usedby any particular resident.

In the case now before this court, each Plaintiff knew that the Association provided

services and amenities throughout the development at the time he or she bought a chalet. As the

trial court in this case found, each "Plaintiff had sufficient notice of this relationship from the

'series of deeds' already of record to satisfy due process concerns as well as the statutory VCIOA

definitions in order to trigger application of the mandatory elements of the Act." Pearson

Decision PC 14.

Therefore, under (i) all of Alpine Haven's declarations, (ii) Title 27A and (iii) basic

common law principles of what is fair and equitable, Mr. and Mrs. Khan, Mr. and Mrs.

Gadpaille, and Ms. LaPointe must contribute their share of the expenses the Association incurs to

maintain all of Alpine Haven's common facilities, without regard to their individual level of use

or desire to use them.

Going back to Evergreen, it is useful to show here just why the assessments that the

Association has made against the Plaintiffs' chalets in this case are reasonable and are not

burdensome. In 1992, in Deptula v. Leisure Properties, Inc. and Daberer, docket number

S274-89 Fc, the Franklin Superior Court found that $1,200.00 was a reasonable annual fee for

the road maintenance, streetlights, garbage pickup, and driveway plowing that Mr. Daberer

provided to all of the chalets in the Alpine Haven development. Martin Decision Appellant's

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Supplemental Printed Case PC 20. This is, in all material respects, the same development in

essentially the same configuration in which it exists today, and exactly the same services. The

Khan chalet, the LaPointe chalet, and the two Gadpaille chalets all existed at that time. The

assessment years at issue in this case are 2009 through 2015. The assessments in 2009 and 2010

were $1,750.00. In 2011 through 2015, they were $2,177.93, which includes a $150.00 deposit

into a reserve against unexpected contingencies and in which the Plaintiffs indirectly own a

one/eighty-fifth interest. The Consumer Price Index (CPI-U All Items, 1984 =100) on May 1,

1992 was 139.200; on May 1 of 2009, the CPI was 213.856; in 2010, the CPI was 218.178; in

2011, the CPI was 225.964; in 2012, the CPI was 229.815; in 2013, the CPI was 232.94; in 2014,

the CPI was 237.900; and in 2015, the CPI was 238.654. The Association asks the Court to take

judicial notice of these CPI values. They are not subject to reasonable dispute, and are capable of

accurate and ready determination by resort to a source whose accuracy cannot reasonably be

questioned -- the Bureau of Labor Statistics. V.R.E. 201; Appellant's Supplemental Printed Case

71. The following spreadsheet shows Association's assessments from 2009 through 2015, and

compares them to that $1,200.00 fee in 1992. When adjusted for inflation, the assessments are

only $669.00 more, or $95.57 per year, than the $1,200.00 that the Franklin Superior Court found

was a reasonable fee in 1992.

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It is submitted that $95.57 a year in inflated dollars is neither an unreasonable or a

burdensome fee for roads, streetlights, garbage pickup, driveway plowing, tennis courts, a

swimming pool, hiking trails and maintenance of commonly owned grounds, particularly when

most if not all of that $95.57 is in a reserve for future unanticipated expenses that the Plaintiffs

would otherwise have to pay when they arise.

THE 171234 CANADA, INC. CASE HAS LIMITED, IF ANY,PRECEDENTIAL AUTHORITY IN THE INSTANT CASE

QUESTION 1

The Plaintiffs rely heavily on this court's decision in 171234 Canada Inc. v. AHA Water

Cooperative, 2008 VT 115, 184 Vt. 633, 968 A.2d 303(Vt. 2008). That reliance is misplaced.

The Association was not party to that case in the trial court. Although the Association attempted

to intervene in the appeal, this Court denied its intervention motion. Therefore, that decision is

not binding on the Association.

There are at least two additional reasons why reliance on the Canada Inc. case is

misplaced.

First, the main issue in Canada, Inc. was whether the chalet owners were required by

their deeds to use the cooperative's water service. The trial court found that the deed covenant

that dealt with water service -- "the grantor agrees to supply water to said premises as now

piped" and "for [this service] the grantees . . . shall pay a reasonable annual fee therefor" -- was

ambiguous. In other words, just from the language of the deeds, the trial court could not tell

whether the chalet owners were or were not required to take their household water from

Daberer's water system. 171234 Canada, Inc. had submitted, as a part of its summary judgment

motion, an affidavit from Alpine Haven's developer Hubert Daberer. In his affidavit, Mr.

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Daberer stated that he did not intend to require the chalet owners to use his water system if they

did not want to. The Cooperative never filed any countervailing evidence. The trial court

necessarily treated Mr. Daberer's statement as an undisputed fact, and based its summary

judgment on it against the Cooperative on it. Appellant's Supplemental Printed Case 69. The

failure to contradict Mr. Daberer's affidavit was a serious deficiency that led directly to the

adverse decision that the Cooperative suffered in that case. Counteracting Mr. Daberer's affidavit

would not have been difficult. Mr. Daberer took precisely the opposite position in the Franklin

Superior Court case of Leisure Properties, Inc. v. Svobodny, docket no. S149-9-97 Fc.

Second, the trial court's summary judgment order was based in part on its conclusion that

the Cooperative "did not record a declaration. . . ." This conclusion is correct with respect to the

Cooperative. It is not correct, however, nor was it even at issue, with respect to the Association.

The series of deeds by which Alpine Haven was created is its declaration. § 1-103(13); § 1-103

comment 14.

Therefore, the Association submits, the decision in 171234 Canada, Inc. is (i) not binding

with respect to the Association, (ii) was the product of the Cooperative's failure to use readily

available evidence to dispute Mr. Daberer's affidavit, and (iii) the Association's claims in the case

at bar are based on a declaration that the Cooperative did not have.

That is why, in the case at bar, the trial court found that 171234 Canada, Inc. was of little

import with respect to the Association: "The Canada case is not binding precedent against any of

the parties here, nor does it really offer much in the way of critical discussion of the precise issue

now squarely presented." Pearson Decision PC 16.

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CONCLUSION

Hubert Daberer developed the Alpine Haven property well before there were any rules or

even experience in Vermont regarding how to go about creating the kind of development he

envisioned. Vermont in fact was the last state in the nation to adopt a condominium statute,

Chapter 15 of Title 27, which became effective in 1969, 6 years after Mr. Daberer sold his first

lot. Burlington attorney Carl Lisman chaired the Uniform Laws Committee that drafted Title

27A. Here is what he had to say about condominiums in Vermont, in a 2006 presentation to the

Maryland Task Force on Common Ownership Communities:

I became a uniform laws Commissioner in 1976, I knew very little about theorganization and shortly after my appointment I received a letter congratulating meon being appointed a Commissioner, telling me that my first committee meeting willbe the meeting of the Uniform Condominium Act Committee in the fall of 1976. Idid not know then what a condominium was; it was a word that I had heard thereweren't many of those things in Vermont at the time and those that were, were sortof thought to be weird and not anything that would gain traction in the housingmarket. Times have changed and I'm glad that we went through the true false test, Imay be preaching to the choir but more than half the homes started in the UnitedStates are homes that will end up in Common Ownership Communities and this getsbigger and bigger everyday and it needs more and more attention on a legislationlevel.

It is little wonder that, 13 years before Mr. Lisman's comments, Mr. Daberer's deeds were not the

sophisticated documents that we use today to document this complex form of property

ownership.

As Judge Cashman wisely noted about Alpine Haven in the Orrock case, "when property

owners have a right to municipal type services within a community without a municipal

government, severe disputes occur." Cashman Decision, Appellant's Supplemental Printed Case

46. The case now before the court is one of those severe disputes. Recognizing these problems,

the legislature included all of these pre-1999 real estate developments like Alpine Haven within

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Title 27A as a part of the natural evolution of the law, to make this increasingly popular form of

property ownership more manageable. As Judge Pearson aptly observed, PC 13:

one raison d'etre for [Title 27A] is to bring some order out of chaos so that pre-existing (i.e., pre-1999) developments, in which such instruments (and otherdocumentation) were not routinely used, could function more efficiently withoutconstant litigation (such as the many cases involving Alpine Haven) serving as aconstant distraction for ordinary homeowners, and a perpetual drain on limitedresources and funds.

As the Colorado Supreme Court held in Evergreen, homeowners' associations like the

Appellant in this case have legal authority to conduct their community's affairs, including

modifying the obligations of its residents, as long as the modifications are reasonable and not

burdensome. 73 P.3d at 7. The changes effected by the amendments to the Association's

governing documents in 2002 and 2011 are just that -- both reasonable and not burdensome.

Therefore, the Association requests that the Court:

AFFIRM that Alpine Haven is a common interest community;

AFFIRM that each Plaintiff's chalet is a part of that community;

AFFIRM that the Association's members could amend its governing documents without thePlaintiffs' consent;

REVERSE the trial court's rejection of the proxy votes that were cast when the Association'smember amended its governing documents in 2002 and 2011;

REVERSE the trial court's conclusion that the Association violated the Plaintiffs' procedural dueprocess rights when its members amended its governing documents in 2002 and 2011; and

REMAND this case to the trial court for a determination of how much money including attorneysfees the Plaintiffs owe to the Association.

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