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Phoenix East Association, Inc. v. Perdido Dunes Tower, LLC

Supreme Court of Alabama

June 14, 2019

Phoenix East Association, Inc., Phoenix VIII Association, Inc., and Karen Draper
v.
Perdido Dunes Tower, LLC, et al.

          Appeal from Baldwin Circuit Court (CV-15-900449)

          STEWART, Justice.

         This case involves a dispute over the planned construction of a high-rise condominium along the Gulf of Mexico in Orange Beach. For the reasons stated below, we dismiss the appeal in part and affirm the judgment of the Baldwin Circuit Court.

         Facts and Procedural History

         In 1984, Perdido Dunes, a Condominium ("Perdido Dunes"), a beachfront condominium in Orange Beach ("the City"), was created upon the filing of a declaration of condominium in the Baldwin Probate Court ("the probate court"). The declaration established Perdido Dunes Association, Inc. ("PDAI"), as the condominium association for Perdido Dunes. The property on which Perdido Dunes was situated ("the Perdido Dunes property") is a rectangular plat bordered by Alabama State Route 182 to the north and by beachfront along the Gulf of Mexico to the south. As originally constructed, Perdido Dunes consisted of two buildings. The first building contained 8 condominium units ("the 8-unit building") and was located on the southern-most edge of the Perdido Dunes property facing the beach. The second building, containing 35 units ("the 35-unit building"), was constructed along the western property line of the Perdido Dunes property. The eastern side of the Perdido Dunes property contained a parking lot.

         The Perdido Dunes property shares common boundaries with property containing other beachfront condominium buildings. Phoenix East, a Condominium, which was created by the filing of a declaration of condominium in the probate court in 1995, is a 14-story condominium with 158 residential units located adjacent to and directly east of the Perdido Dunes property. Pursuant to the 1995 declaration, Phoenix East Association, Inc. ("Phoenix East Association"), is the condominium association organized pursuant to the Alabama Uniform Condominium Act, § 35-8A-101 et seq., Ala. Code 1975 ("the Act"), for the purpose of managing Phoenix East.[1] Phoenix VIII, a Condominium, is a 15-story condominium with approximately 81 units that was constructed in 2000 and established by the filing of a declaration of condominium in 2000. Phoenix VIII is located adjacent to and directly west of the Perdido Dunes property. Pursuant to the 2000 declaration, Phoenix VIII Association, Inc. ("Phoenix VIII Association"), is the condominium association organized pursuant to the Act for the purpose of managing Phoenix VIII. The Perdido Dunes property is separated from the Phoenix East and the Phoenix VIII properties by retaining walls owned by the latter condominiums that run along the boundary lines of the respective properties.

         On September 16, 2004, Hurricane Ivan made landfall over Baldwin County, causing significant structural damage to Perdido Dunes. Although repairs were made to the 35-unit building, the 8-unit building was destroyed by the storm, and the remnants of the 8-unit building were subsequently demolished. So that the unit owners of the 35-unit building would not be required to contribute to the cost of rebuilding the 8-unit building, the members of the PDAI negotiated a plan for the Perdido Dunes property. The City's zoning regulations prohibited Perdido Dunes from separating the Perdido Dunes property into two parcels, but the City would allow Perdido Dunes to split the PDAI into two neighborhood associations governed by a master association. Each neighborhood association would own the land beneath its respective building. On October 29, 2005, a majority of the unit owners of the PDAI voted to terminate Perdido Dunes and the PDAI. Simultaneously, the unit owners voted to approve an agreement that would reform the PDAI under a master association named the Perdido Dunes Condominium Owners Association, a Master Association, Inc. ("the Master Association"). The ownership interest in the Master Association would comprise the unit owners of two newly created neighborhood associations, namely the Perdido Dunes Tower Condominium Owners Association, Inc. ("the PD Tower Association"), and the Perdido Dunes 2006 Condominium Owners Association, Inc. ("the PD 2006 Association"). The PD Tower Association would serve as the association for Perdido Dunes Tower, a Condominium ("Perdido Dunes Tower"), a prospective 10-story, 20-unit condominium building measuring 56 feet in length that was to be developed by Perdido Dunes Tower, LLC ("Tower LLC"), on the land where the 8-unit building had been located. Likewise, the PD 2006 Association would serve as the association for Perdido Dunes 2006, a Condominium ("Perdido Dunes 2006"), which consisted of the 35-unit building. Under the agreement approved by a majority of the Perdido Dunes unit owners, the common-area property for the two buildings would be owned and managed by the Master Association. The board of directors of the Master Association would consist of six members, three of whom would be selected by the unit owners who were members of the PD Tower Association and three of whom would be selected by the unit owners who were members of the PD 2006 Association.

         Because the arrangement contemplated by the agreement was not a conventional situation contemplated by the Act, the PDAI sought ratification of the agreement by the Baldwin Circuit Court ("the trial court"). The PDAI filed a complaint for declaratory relief in the trial court, which was docketed as case no. CV-05-741 ("the termination action"). The complaint named as defendants all Perdido Dunes unit owners. On January 5, 2006, the trial court entered an order finding that Perdido Dunes had been validly terminated pursuant to the terms of the 1984 declaration. The trial court also approved of the formation of the Master Association, the PD Tower Association, and the PD 2006 Association. The trial court further stated that "the officers of [the PDAI] and the managing members of [Tower LLC] are hereby appointed as Trustees for the holders of their respective interests and are further empowered to affect all actions necessary to establish a new master association and two (2) neighborhood condominium associations." On January 6, 2006, declarations of condominium creating the Master Association, Perdido Dunes Tower, and Perdido Dunes 2006 were filed in the probate court. The articles of incorporation forming the new condominium associations also were filed in the probate court. The new condominiums and associations were created and organized pursuant to the Act. The trial court entered a final judgment in the termination action on January 6, 2006 ("the 2006 judgment"), acknowledging that the appropriate documents had been filed in the probate court to establish the new condominiums and the new associations. The trial court incorporated the January 5, 2006, order into the 2006 judgment by reference. Neither Phoenix East Association nor Phoenix VIII Association intervened in the termination action. No appeal was taken from the 2006 judgment.

         On August 1, 2008, th City issued a building permit to Tower LLC authorizing it to begin construction of Perdido Dunes Tower. Construction, however, was delayed as a result of litigation between the PD Tower Association and the PD 2006 Association. That litigation was resolved in October 2014. Tower LLC established plans to begin construction of the building on April 13, 2015.

         The planned construction was interrupted on April 6, 2015, when the City notified Tower LLC of concerns relating to the width of the proposed Perdido Dunes Tower in relation to the neighboring properties, namely Phoenix East and Phoenix VIII. Specifically, the City questioned whether the location of Perdido Dunes Tower would comply with the City's zoning regulation requiring a 20-foot side setback in relation to neighboring property on either side of a condominium building. In order for the 56-foot-wide Perdido Dunes Tower to comply with the 20-foot setback requirement in relation to Phoenix East and Phoenix VIII, the southern property line of the Perdido Dunes property would need to measure at least 96 feet in length. The City directed that Tower LLC could not begin substantial construction on the building, and the City informed Tower LLC that its building permit would be revoked. If the building permit were revoked, Tower LLC would be required to apply for a new permit under updated City building standards, which, according to the trial court's judgment being challenged on appeal, "would have required significant additional undertakings by the Tower LLC to attempt to complete the building of a compliant tower structure."

         On April 13, 2015, the PD Tower Association and Tower LLC filed a complaint in the trial court against the City, seeking a judgment declaring that Tower LLC could move forward with the construction of Perdido Dunes Tower and seeking to enjoin the City from revoking Tower LLC's building permit. The case was docketed as case no. CV-15-900449 ("the declaratory-judgment action"). In the complaint, the PD Tower Association and Tower LLC alleged that, since 1984, they or their predecessors had been in peaceable possession of all property east of the retaining wall separating the Perdido Dunes property from Phoenix VIII and west of the retaining wall separating the Perdido Dunes property from Phoenix East. This, they alleged, included two narrow strips of land, one on the eastern side of the Perdido Dunes property and one on the western side, that Phoenix East Association and Phoenix VIII Association contended were part of the common elements of their respective condominium properties. The PD Tower Association and Tower LLC further alleged that they intended to file a separate action to quiet title to the disputed strips of land. On April 13, 2015, the same day the complaint was filed, the trial court entered a temporary restraining order enjoining the City from revoking Tower LLC's permit, but also enjoining Tower LLC from beginning construction on Perdido Dunes Tower. On April 20, 2015, Phoenix East Association filed a motion to intervene in the declaratory-judgment action, arguing that it had an interest in the property that was the subject of the action. The trial court granted Phoenix East Association's motion. In its answer as an intervening defendant, Phoenix East Association denied the allegations in the complaint concerning Tower LLC and the PD Tower Association's adverse-possession claim to the narrow strip of land between the two properties, and it alleged affirmative defenses to contest any claim by Tower LLC and the PD Tower Association of adverse possession of any property belonging to Phoenix East.

         On April 21, 2015, Tower LLC and the PD Tower Association filed a complaint in the trial court seeking to quiet title to the disputed strips of lands, naming the Master Association and Phoenix East Association as defendants. That case was docketed as case no. CV-15-900468 ("the adverse-possession action"). In the complaint, Tower LLC and the PD Tower Association alleged that they had acquired title by adverse possession to a narrow strip of land measuring 2.4 feet in width lying west of the retaining wall that separated the properties.[2] Similarly, Tower LLC and the PD Tower Association later named Phoenix VIII Association as a defendant in an amended complaint alleging that Tower LLC and the PD Tower Association had acquired title by adverse possession to a narrow strip of land measuring 1.3 feet between the Perdido Dunes property and the retaining wall adjacent to Phoenix VIII's property. The trial court consolidated the adverse-possession action and the declaratory-judgment action. Tower LLC and the PD Tower Association amended the complaint in the adverse-possession action to join as defendants all owners of condominium units in Phoenix East, Phoenix VIII, and Perdido Dunes 2006, including Karen Draper, who is the owner of a unit at Perdido Dunes 2006 and who aligned her interests in the litigation with those of Phoenix East Association and Phoenix VIII Association.

         In the declaratory-judgment action, the trial court held a hearing on April 23, 2015, on the motion for a preliminary injunction. Vincent Lucido, a licensed land surveyor, testified that he had prepared a special-purpose survey, which also constituted a boundary survey, of the Perdido Dunes property on April 22, 2015.[3] Lucido testified that the survey was conducted to show the location of the Phoenix VIII and Phoenix East properties in relation to the prospective Perdido Dunes Tower. Lucido testified that he used landmarks in the field and the description of the property in the original warranty deed of the Perdido Dunes property from 1969 to determine the location of the section line between the properties and to establish the starting point of his survey. Lucido testified that descriptions of the property in surveys conducted after the 1969 deed but before the 2015 survey altered the starting point by approximately three feet, which would have shortened the width of the Perdido Dunes property. Lucido stated that markers that had been relied upon by previous surveyors were no longer in place because they been destroyed by storms or by utility construction and that, as a result, "[t]he written word [in surveys and recorded documents] and where [a property line] actually is in the field are two different things sometimes." Lucido further testified that discrepancies in measurements between the 2015 survey and older surveys of the properties in question could have been caused by different surveyors using different starting points. Under direct examination by counsel for Tower LLC and the PD Tower Association, Lucido testified as follows concerning the distance he measured between the retaining wall of Phoenix VIII and the retaining wall of Phoenix East:

"Q. So, if I understand your process, you set out the lines that were the eastern boundary for Phoenix [VIII] and the western boundary for Phoenix East and you put those on the survey?
"A. That's correct.
"Q. And then you've taken measurements of distances north and south in between the lines that you set out that are those neighbor's boundaries. You've also measured in between the walls, haven't you?
"A. That's correct. That's that mention there, 100.2 between the two walls."

         According to Lucido's testimony and Lucido's 2015 survey, the southern property line of the Perdido Dunes property between Phoenix VIII's and Phoenix East's property lines, excluding the narrow strips of land at issue in the adverse-possession case, measures 96.5 feet wide. Lucido testified that, although his survey was not a title-boundary survey for the PD Tower Association or Tower LLC, he would not object to it being used for title purposes. Following the hearing, the trial court converted the temporary restraining order to a preliminary injunction.

         At a meeting held on November 17, 2017, a majority of the members of the Master Association voted to convey to Tower LLC a one-foot-wide parcel of the common-area property located immediately west of the footprint of where Perdido Dunes Tower would be constructed. The purpose of this conveyance was to center Perdido Dunes Tower to comply with the 20-foot side setback requirement on both the east and west sides of the Perdido Dunes property. The PD Tower Association, the Master Association, and the City later asserted to the trial court that, after the centering of the proposed Perdido Dunes Tower, the 20-foot side setbacks would not include any portion of the disputed strips of land at issue in the adverse-possession action. On December 29, 2017, the Master Association deeded the one-foot-wide strip of land west of Perdido Dunes Tower to Tower LLC.

         On February 6, 2018, Tower LLC, the PD Tower Association, the Master Association, and the City collectively filed in the declaratory-judgment action and in the adverse-possession action a document titled "Notice of Proposed Settlement and Motion to Enter Consent Decree." The trial court entered a consent decree in the declaratory-judgment action on February 15, 2018 ("the consent decree"), stating, in pertinent part:

"13. The Tower LLC and [PD] Tower Condominium Association subsequently undertook additional efforts to replot and adjust where the footprint of the tower would be located in an effort to meet the twenty (20) foot side setback requirements. The Tower LLC and [PD] Tower Condominium Association submitted to the City a revised site plan, moving the footprint of the condominium in a westerly direction. No other aspects of the footprint (e.g., size) were changed. The results of this adjustment allow for a twenty (20) foot side setback on the east and west sides of the property. ...
"14. The City has reviewed the site plan provided and concluded that it is not contrary to the public interest to allow the footprint of the tower structure presented in 2008, and which formed the basis for the initial approval of the building permit, to be adjusted so as to provide for side setbacks between the east and west property lines and the tower structure equal to or in excess of twenty (20) feet. The City has also concluded that it is not contrary to the public interest to allow the tower structure with that change to be constructed in substantial compliance with the plans submitted in support of the 2008 permit, and to allow construction of the tower structure as previously submitted in compliance with the building code requirements in place at the time of the initial issuance of the permit.
"NOW THEREFORE, in consideration of the premises, based upon the agreed facts as set forth above, and in furtherance of the agreement of the Settling Parties, it is hereby:
"ORDERED, ADJUDGED and DECREED that:
"15. The Tower LLC and the [PD] Tower Condominium Association have already submitted and the City Building Department has approved full and complete building plans for the tower structure in connection with the permitting process. The Tower LLC has already submitted a revised site plan (drawing C-1) to the City, which has been approved by the City Building Department and the City Council. Additionally, the Tower LLC shall submit the remaining site plan drawing (drawings C-2 through C-4) reflecting the movement of the Tower building footprint to the west as herein described, to the City Building Department.
"16. Upon receipt of the revised site plans ..., the City staff will undertake a review of these plans to ensure compliance with the twenty (20) foot side setback provisions. Upon review and confirmation of compliance with the side setback provisions, the Tower LLC and [PD] Tower Condominium Association will be allowed to construct the proposed structure as long as the Tower LLC and [PD] Tower Condominium Association and their builder comply with the process and procedures for construction that were in place in 2008 and the substantive requirements contained in the Building Code as they existed in 2008.
"17. At the completion of construction, if the footprint of the tower structure conforms to 'Exhibit A' [to the consent decree] and the tower structure conforms to the relevant 2008 Building Code provisions, the City will issue a Certificate of Occupancy to the [PD] Tower Condominium Association.
"18. The provisions of this Consent Decree shall run with the land and may be relied upon, enjoyed and enforced by the Tower LLC and the [PD] Tower Condominium Association, ...

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