Goddard v. Fairways Development General Partnership

Fairways Development General Partnership (the developer) (defendant) began developing a planned-unit development in the early 1980s. Ninety villas were planned, but by 1982, only five had been built. The development’s declaration gave the developer superior voting rights until the development was completed. The declaration also created a homeowners’ association to maintain the common areas, to be funded by assessments levied against each villa. The association could only be dissolved with the consent of 100 percent of the villa owners. The developer owned one villa but held undeveloped parcels that were not subject to assessment. In February 1987, the association held its first meeting, and the developer filed a deed conveying to the association the common areas, which were in substandard condition and had no fund to cover the maintenance and repairs costs. In March, the association notified the villa owners that the association would start maintaining the common areas, but the assessments were insufficient to cover those costs. The villa owners proposed that the developer pay assessments in proportion to the developer’s voting power or that the association be dissolved and the development be converted into a subdivision. The developer rejected both proposals. The trial court refused to dissolve the development or grant other relief. The villa owners appealed, arguing that the trial court erred in holding that (1) the association was responsible for maintaining the common areas; (2) the development could not be dissolved; and (3) the developer had not breached a fiduciary duty to the villa owners by not voting for higher assessments. The villa owners specifically argued that the developer was responsible for ensuring that (1) the common areas were in good repair when conveyed to the association; and (2) the association had sufficient funds to maintain the common grounds.